Home Feature INTERVIEW: Recapitalizing FMBN will make way for affordable housing – Developer

INTERVIEW: Recapitalizing FMBN will make way for affordable housing – Developer

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Prince Oluseyi Lufadeju is Managing Director of Shelter Initiatives Ltd. He is a former Managing Director of Shelter Afrique based in Nairobi, Kenya. He rose to the rank of director in the Federal Ministry of Works and Housing prior to his appointment at Shelter Afrique. He is a fellow of the Nigerian Institute of Town Planners (NITP) and he is the chairman Board of Trustees of the Real Estate Developers Association of Nigeria (REDAN). Upon his return from Nairobi, he went into estate development. He built the famous Yayale Ahmed Estate in Abuja which sold at a very affordable cost. He was to do more construction but his land was taken away. Speaking with Viewpoint Housing News, Lufadeju gave recipe for affordable housing in Nigeria.

Viewpoint: So far, how many estates have you built in Abuja?

Lufadeju: Well, we have developed only the Yayale Ahmed Estate. We are in the process of embarking on the second estate project in Lugbe, Airport road. We experienced some difficulties in the first project because of the process and procedures of the Federal Mortgage Bank of Nigeria [FMBN] and the FMB [First Bank Mortgages0 that were involved in the project.

They made us to pay unnecessary sums of money as interest when we had already completed the project and that gave us a serious setback. And it happened to others because the management and the procedures of the Federal Mortgage Bank of Nigeria made life very difficult for developers at that time.

But I think now, they are streamlining. They are on a better path now because they have a new management and I believe the new management is trying to clean up the acts and make life more bearable to people who are assisting in the provision of shelter in the country.

Viewpoint: So you got loans from FMBN.

Lufadeju: We took loan from FMBN to build the Yayale Ahmed Estate and we completed the estate and handed it over. People moved in. This was between 2006 and 2007 when the Civil Service Day was celebrated by commissioning the estate. Since after 2007, because of lack of cooperation from the PMIs the Federal Mortgage Bank could not exit us from the loan and they kept on charging interest on a project which we had already completed, handed over and people were already living in. It was not normal but that was what we experienced. FMBN ought to have sanctioned them but they didn’t.

A Semi-detached 4 Bedroom Duplex at the Yayale Ahmed Estate in Apo, Abuja

Viewpoint: Shelter Initiative Ltd builds estates only or it does other things as well?

Lufadeju: We do estates and other infrastructure. Our properties are very much for the low income earners. The two bedrooms and one living room cost N700,000; three bedrooms and one living room was N2.8 million; and the four bedrooms was for N4.5million but unfortunately we could not continue with that revolution.

A lot of our colleagues in the building industry were very upset with us because of the low cost. They were like “What type of property are you building? Is it a shanty?” But when people came, they saw what we built was the normal standard property.

I believed that the type of job we were doing and the profit margin of a unit should be minimal in the interest of the low income people that we were trying to assist.

There was no need to put high charges and interest to make these properties unaffordable for the low income people. What we were doing was to make these things available and let the people experience it.

In my travels around the world, I found that the only way you can make people have access to decent shelter is to moderate the price so that they can afford it and within the time they are in service. They should be able to repay the loans and get on with their families. But unfortunately, we could not continue with the revolution we started. We were stopped by the financial mechanisms that were put in place.

The land that was given to us to do the second phase was taken over by the El-Rufai government. They revoked the land so we had to opt out.

Viewpoint: Early last year, we were told that some companies had exited the FMBN Estate Development Loans. Was your company not among?

Lufadeju: You see, it’s a ding dong affair. We were told that we had been exited. We are one of the successful companies that had done the work, not using the money for other things but for property development.

We were even given a plaque which demonstrated that we had been cleared but later last year, we received a letter from the Special Presidential Investigation Panel for the Recovery of Public Property. This was based on a list that FMBN gave to this panel and they invited us as one of those who had not delivered on the loans which we took; so we were taken aback!

We went there and when they saw all our records, they were sorry that this type of thing could happen to us. That a company that had meritoriously delivered and had completed its project years ago would be listed.

As I speak to you, over 10 years, we have not received any clean bill of health from the FMBN. That is why our name was on the list of people invited by the presidential panel. But we were able to clear this.

We gave them all the information and they were very satisfied with us. They said the FMBN should do whatever is needed to be done to save us from undue ill-treatment and that anything that had to do with their own internal mechanism should not affect us. They should go and sort themselves and let us go because we had done what we were meant to do. That was the way we ended the issue.

About two weeks or so, we wrote them [FMBN], reminding them that we met with the presidential panel and they saw our papers and were in agreement with what we had done so what are they going to do in response? Because most times when you go to take a loan for new project, they will ask you if you had completed the previous project.

Viewpoint: How has business been for you in the past three to four years?

Lufadeju: It has been very tough but by the grace of God we are still on our feet and we are hoping to embark on a new project in the next one or two months. The new system which is in vogue now is before you build, you must have the off-takers, thereby avoiding the cases of unsold stocks. When we design the property or estate, the price is within the limit of income of the beneficiary so it is easy to dispose the property.

You can see that in Abuja there are a lot of properties that are not occupied. They are overpriced. So we must be able to match the construction and selling of such properties.

Viewpoint: What do you think can be done to encourage developers to concentrate more on low income housing?

Lufadeju: Luckily, government is making efforts to make the mechanism for the low income people to have access to decent shelter. In addition, we expect that FMBN be recapitalized very shortly. I think the government is working on that.

There is a bill for government to make it easier for developers around the country to have access to finance. There is also the Family Home Fund which is to provide housing for the low income people. And there is the Nigeria Mortgage Refinance Company to assist in financing…

Secondly, the access to land must be guaranteed by the government. The government should open up areas like providing infrastructure so that people can develop in these areas all over the country.

Luckily, the minimum wage has now been increased. Even though it’s not still at the level it should be, what has been given is appreciable. If a worker pays 20 to 25 percent of his income, he should be able to have a decent accommodation. This is what we should be striving to do and I hope we will be able to get there.

Viewpoint: As a senior member of REDAN, what message do you have for developers?

Lufadeju: We are lucky in REDAN to have the present president, Rev Chime Ugochukwu. He has done a lot of innovative work to raise the profile and the level of REDAN. We are involved in data collation for properties all over the country and REDAN is working with other agencies. It was initiated by Rev Chime with the CBN.

We were at the Construction Artisans Awards and Job Skill Expo. I was amazed and impressed with what I saw. Now, in Nigeria, we are able to train our own workers so we don’t have to go to Benin or Togo to import artisans that will work for us. And I saw that the government is in support because the vice president was represented at the event.

With sustained interest and support from the Federal Government, REDAN will be in good position to improve the housing stock in the Country at affordable rates and in decent environment.

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