Owning a home is where a story begins. For many Nigerians, this is a daunting ambition. The numbers are niggling. 24.4 million Nigerians, tops global homelessness ranking report in 2024. Surges in inflation, Naira devaluation, lowering living standards, inadequate financing systems, and regulatory bottlenecks are leading factors. To address Nigeria’s housing deficit, 700,000 annual housing units and 28 million houses are required. Nigeria’s economy has one of the world’s youngest populations, a high population growth rate and population numbers estimated to become the World’s 3rd largest country in 2050. These numbers will increase the housing needs. What are the options available to Nigerians? Can housing be affordable for Nigerians?
Affordability without compromising standards is key for aspiring homeowners in Nigeria. Innovative solutions are at the top of the developers’ strategy. Actionable strategies, savings plans, flexible payment options, mortgage facilities, cooperative housing schemes, and public-private partnerships are at the core of the developer’s business model. Modular and fabricated constructions, inclusionary zoning, smart home designs, government-backed mortgage banks, rent-to-own schemes, crowdfunding, and upgrading slums and informal settlements are innovative options to curb affordability challenges. Innovations are also adopted in internal processes. The industry has seen increased adoption of technology, artificial intelligence, sales optimisation, strategic marketing and impeccable customer experience. Demands continue to outweigh supply. Developers are grappling with inconsistent procurement challenges due to inflation. Material costs, shortages and labour supply issues orchestrate supply chain challenges. There are challenges of insecurity in rural locations, urban planning concerns, reduced purchasing power of Nigerians, inadequate infrastructures, limited access to finance, unstable business environment and government policy instabilities. What are the multiplier effects?
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Lack of affordable housing will come at a cost. A huge chunk of household disposable income will be spent on rent and acquiring property. This challenge will disrupt and dissuade the savings culture among the few high-income earners. The surge in housing cost could lead to delays in project delivery timelines, impact trust and possibly compromise on quality housing. This could lead to an upward trend in building collapse within the country. The absence of affordable housing will exacerbate economic inequality, growth of informal settlements, surge in mental health challenges and increased pressure on law enforcement authorities. Despite these challenges, the sector offers prospects for hope and growth.
Real estate is Nigeria’s 3rd largest sector, ahead of oil and gas according to the Nigerian Bureau of Statistics Report for 2024. It has a high propensity for employment opportunities and income redistribution, boosting local communities and economies. Real estate offers an opportunity for impact investing. “Doing well while doing good.” It offers an inclusive business model. One that could include those at the base of the pyramid as part of their value chain with prospects for sustainable wealth creation. The government must translate the industry’s performance into visible benefits to the vast majority of underserved Nigerians.
Affordable housing offers a win-win situation for the government and Nigerians. Dreams must begin to translate into realities. The government’s monetary policies must begin to nosedive inflation. The government should adequately regulate the industry to get rid of quacks and reputational spoilers polluting the industry. This will reduce material costs, support local suppliers and promote local content. Investment in rural and urban housing schemes, innovative financing options, lower land costs, fees, and charges. Improvement in basic amenities in rural areas is key to rural housing development. Incentive and government financing programmes are necessary to support developers who are environmentally friendly, prioritise green areas, and support sustainability. Developers must build stronger brand trust, reputation, and excellence and incorporate technology into housing solutions.
Victor Alikor is a Development Economist, Innovation & Strategy Manager at Mshel Homes.
