Why Housing PPP Project Hits Rock!

FG begins construction of 20,000 affordable mass housing project in Lagos (Nairametrics, 2023). Most African government make headline news with ambitious programs, and so it was in 2019, I was involved in the 500,000 Affordable Housing Project in Kenya. Earlier in 2015, I was a Lead PPP Consultant on a luxury housing project located in Asokoro, Abuja, Nigeria.

• Some African government make big headline news without details of how to achieve these laudable projects. In some cases, they are simply political moves.
• There are cases where the governments are truly sincere such as Jakande Housing Estates in Lagos

Now fast forward to 2023, it is reported that Federal government has announced the launching of renewed hope cities and real estate projects which constitute about 20,000 affordable mass housing in Lagos State. Also, that President Bola Tinubu recently launched Renewed Hope Cities and Estates Scheme which aims to provide 100,000 affordable mass decent housing units to Nigerians nationwide. These are laudable news line, but here are what my experiences have taught me:

1)????? Land – Government have easy access to land using various mechanisms. But where land are forcefully taken over without due process, as well as paying adequate compensation, present contingent litigation. No private sector investor will risk funds in such project after conducting due diligence. FG should carry due diligence and follow due process in land acquisition, a case in point is the recent Lagos – Calabar coaster line

2)????? Finance – housing requires long-term funding. Without proper project development and planning, it is difficult to attract multilateral funding e.g. Kenya 500,000 Affordable Housing Project. While Kigali PPP Water Project attracted global private funding due to openness and transparency. Without multiple participations, most PPP projects remain at best a good dream.

3)????? Skills – to build 20,000 houses require skills, experiences and integration, which unfortunately are not common within the public sector. To attract skilful personnel, public sector should ensure a framework that defines roles, risks, profits and responsibilities is in place

4)????? EPC – Some Engineering, Procurement and Construction entities have little or no knowledge to execute the PPP project. For instance, the Ji’nan Waste Water Treatment Project, China selected Everbright for the project with a 30-year agreement, which allows private sector committment. It had both technical and financial capabilities to deliver the project. The project was successful and it is recommended as a model for developing countries. China PPP total investment is estimated $2.27 Trillion USD.

5)????? Mortgage facility is a deal breaker in any housing project. The government does not have the fund to undertaken this project. Without adequate mortgage institutions or special facility to bridge the gap, it is doubtful whether any meaningful progress will take place. BVN and NIN are necessary steps that can lead to citizens' identification and tracing.

6)????? Judicial System – without a reliable and functioning judicial system, FDI will exercise caution before committing resources to housing projects

7)????? Housing market – another factor that should consider is how easy to convert houses to cash in case default or other urgent need. Consideration for secondary housing market is necessary.

8)????? Risk – it comes in various shapes, this should be factor in any housing projects.

In my opinion, it is good to think big, but better to implement in batches to reduce the impacts of failure. To increase citizens trust, government should walk the talk. If above factors are addressed, it will boost private sector confidence and crowd in investments. When the factors are right, investment funds are always available.

By

CEO – Connectronics

W. Akhator-Eneka (PhD, MBA, FCA, FMVA)

Alumnus:?University of Oxford, UK, CFI, Canada; ICAN, Nigeria; ESUT, Nigeria & UNIBEN, Nigeria