Home Feature Interview: Why FMBN can’t tackle Nigeria’s housing problem – Bala Ka’oje

Interview: Why FMBN can’t tackle Nigeria’s housing problem – Bala Ka’oje


Hon Bala Ka’oje, former Minister of Youth and Sport is a developer and member of Nigeria’s premier housing body, the Real Estate Developers Association of Nigeria (REDAN). Ka’oje spoke with Viewpoint Housing News giving reasons the Federal Mortgage Bank of Nigeria (FMBN) can hardly be used to meet Nigeria’s housing need. The former minister denied that the Estate Development Loan (EDL) window of FMBN was abused by REDAN members, pointing out that where FMBN is led by a banker whose interest is only to make profit rather than a professional whose focus will be to deliver affordable houses is no good. According him, by lumping housing with other sectors and appointing a nonprofessional in the field as head, President Muhammadu Buhari acted in error. His advice is, should Buhari retain power this year, he should emulate the Shehu Shagari and Sani Abacha housing initiatives.

Viewpoint: In the past few years, can you say you have produced more or less houses?

Ka’oje: Well, to be honest, developers are now producing less. And the major reason that brought about the backwardness in terms of housing delivery in the country is, most of the organisations that are supposed to monitor or lead housing development are not in good stead of funding. They can’t achieve much in terms of delivering houses.

One of the major organisations, the Federal Mortgage Bank of Nigeria had something called EDL. EDL was specially to attract developers from various parts of the country to access money, develop houses, and of course, allot them to the off-takers through Primary Mortgage Institutions, now banks.

The EDL itself has been cancelled by FMBN. Most of us in this business feel that the fastest way government will be able to deliver houses is through partnership with developers in the country, utilizing that particular initiative of government of providing single-digit loans to developers, because no developer will go to a commercial bank to borrow money. You know that if you’re going to a commercial bank, you are going to build houses that are not affordable to Nigerian workers.

If you want to build 500 to 1,000 units of houses, you need a lot of money to do so. Unless you have some extra ways of making money. But if the opportunities are there, developers are ready and willing to look for the stakeholders and off-takers to produce these houses and deliver.

But the opportunities are not there. The government is not also helping matters because as we speak, this government has left the FMBN the way they met it. Except that they did some restructuring which came as a result of some of our efforts. We have been telling the government that the way FMBN is, it cannot deliver houses.

FMBN cannot be led by a banker whose interest is only to make money. You have to give to a professional whose interest will be to deliver houses and not only the money aspect. Of course, the money aspect is important because if you lend somebody money, you will want to recover it. But if it’s a good professional, he knows how to put one and two together to make sure that the projects that are being handled by developers succeed. Somebody who is after money does not care.

Developers find it hard completing their projects because the people are looking after money alone and in some cases they are at fault. But they don’t see it because if you are expected to get the release of your money within two years to finish your project — I don’t know a project that has succeeded in getting that in this country.

Most of the projects got their releases after four, five years. They will release the tranche and then delay the release and this affects the cost of the project. The developer will now be left in trouble. This is what we have found out in most of our projects in Nigeria.

Viewpoint: The ruling party, in its manifesto promised one million housing units per annum. Have you assessed government’s scorecard in this regard?

Kao’je: I think the government needs to do more. I don’t know how many houses have been constructed by this government since they came. All I can remember and I know is that last year, N35 billion was released for housing construction but those houses they are building, to me as a professional, who will want to see that everybody is sheltered in this country, we cannot make it through that system.

They are getting it wrong. As an expert we need to tell the government the truth. There are other ways we can provide affordable houses with that amount they brought. With N35 billon, they could have provided so many houses, in multiple of what they were able to provide. The designs they used and kinds of materials they used, we cannot go that way with providing affordable housing in Nigeria for many reasons.

We don’t even have the money nowadays. Our money has been mismanaged. We can’t build houses that are very expensive — that are not affordable to the workers.

The minimum wage we are talking about is likely to be N30,000 per month. It is N18,000. Somebody that earns N18,000 with a family, he has to rent a house, pay school fees and feed his family. How much can you deduct from his salary in a month for him to be able to pay for a house that costs N9 million? How many years will he need to be able to pay up that loan? So this method is impossible for us to be able to cover the housing deficit in Nigeria.

Viewpoint: How true is it that the Minister of Power, Works and Housing, Babatunde Fashola is not working with developers? Last year, FMBN launched its new housing scheme in the various regions of the country. Are the companies handling the contracts REDAN members or just contractors?

Ka’öje: The project that I know FMBN is commissioning with the Nigeria Labour Congress [NLC] and Trade Union Congress [TUC] are cooperative projects for members of NLC and TUC. I think basically, what happened there is the Nigerian factor that came into play.

In real estate, like you rightly said, if FMBN, TUC or whoever wants to take money from FMBN — even though these people are contributing to the National Housing Fund, FMBN still needs to partner with the body that provides housing – REDAN. Because they have people that have been checked by the leadership of the organisation and they are sure that these people are trusted to deliver.

But NLC, TUC and others that came together to provide such houses for their members actually brought people that would do the development for them directly. So in other words, REDAN didn’t have the opportunity to play a role in that aspect. It’s only the labour organisations that now selected people you see doing those projects, you see the MD of FMBN commissioning in different parts of the country.

That is also an error to me. Even though NLC and TUC and other labour organisations own these projects, the relationship between REDAN and FMBN should be enhanced because an opportunity has come for a large number of housing. But that relationship was not taken seriously.

Funny enough, there were some developers who were able to go in and they collected a thousand houses. Imagine when one developer takes 1,000 houses — you know there is going to be problem there.

There is just no way things will be done correctly. If it were organised properly — you want to build 1,000 houses — you have so many members of REDAN who can take these projects on a smaller numbers so that you can control quality as well as quantity.

Viewpoint: What is your reaction to the suspension of EDL? Wasn’t it the right thing to do?

Ka’oje: It wasn’t the right thing to do because government all over the world have similar things where they support developers to get loans that they can easily use to complete projects.

Viewpoint: It’s said that EDL was abused by REDAN?

Ka’oje: It was abused but not by REDAN. If you look at most of the people that abused it, you will know that they were not members of REDAN and they didn’t have lands. There were many people who claimed they were developers but they were not members of REDAN. Yet they collected loans from FMBN. They just collected money and ran away after showing fake documents.

Viewpoint: Who’s to blame here, is it FMBN, the minister, who?

Ka’öje: Well, the minister can’t be blamed because he gets to know about the details of that person when something has gone wrong. When everything is going on well, the minister will not know about it so it’s the people that took decision to approve such loan that are to blame.

Secondly, like I told you earlier, if you try to provide affordable housing and you are taking an EDL, agreement for release of your tranches must be sustained. Once FMBN delays your payment, there is problem. If you have the right type of leadership in payment and a developer is having problem, you will intervene immediately, so that the developer is reimbursed or paid more to complete the project.

The reason for doing that is to complete the project. So it is very important that the FMBN works to bring back EDL. And they also have to collaborate closely with REDAN and make sure they meet up their obligations. All those estates that were not completed were as a result of complications that arose as a result of delay in release of funds.

Viewpoint: Former President Shehu Shagari is honoured today by stakeholders in the housing sector for what he did. What is your comment?

Ka’oje: You are remembering Shehu Shagari! I think we lost a leader who actually did so many things. Of course, apart from many other important projects that were done by Shagari, housing is one that touched the lives of the people because, Shagari’s [housing] project was all over the country and the prices were low.

If you look at the design of Shagari houses, the people who had that concept of actually helping the government to provide large number of houses over time… But the designs they are doing nowadays, they are not designs that can be sustained and they cannot go far in terms of [tackling] housing deficit in the country.

Of course, apart from Shagari, the only president I can say that did something that people can talk about regarding housing is Abacha. He built the biggest estate, I think in Africa by the time it was built.

Our president needs to look back to that and not those expensive houses they are building — else it wouldn’t work.

Viewpoint: Do you think Buhari is misled on housing matters?

Ka’oje:  I doubt very much if the president has advice from qualified people who can tell him how to reduce the housing deficit in the country. When you look at it, the FCT Minister is a… Of course, he has workers under him but a leader must always be very knowledgeable himself to be able to contribute — not just waiting for others to come and give him ideas.

Even the minister of housing — it’s a very serious issue that affects the life of citizens in the country generally, from top to bottom. Housing should be given some priority to be led by people who have experience in that area.


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