FG shops for N4.13trn to tackle power, housing challenges

To deliver 1,000,000 houses annually within the next four years

Uba Group

BY VICTORIA ONU, ABUJA

The Federal Government is seeking a total investment of N4.13trn to tackle the numerous challenges in the power and housing sectors of the Nigerian economy.

The planned investment is contained in the National Economic Development Plan of the Federal Government, which was launched last December by President Muhammadu Buhari.

A breakdown of the N4.13trn showed that while the government is seeking about N3.53trn to tackle the country’s housing deficit which is estimated at over 18 million units, about N598bn is needed for the execution of various strategies and initiatives to boost power supply to Nigerians.

A copy of the document showed that the investment in the power sector is targeted at strengthening all aspects of the energy value chain including alternative energy sources and improving overall system reliability.

Averaging 4,500 megawatts in the past eight years, Nigerians have been looking forward to improved electricity supply and may continue to wait as inherent challenges may stall power generation.

While Nigeria had introduced a Service-Based Tariff in late 2020 on the promise that electricity supply would improve, the prevailing situation created a worse experience for consumers.

The DisCos have failed to inject the required funds to boost their working capital and lift the needed infrastructure for the nation’s power distribution network.

They are said to be holding on to decaying assets, while they feed fat on their hapless consumers through the notorious estimated billing system.

Although, electricity is considered a major determinant in the drive for industrialization, President Muhammadu Buhari had said supply to homes and businesses remained dismal in Nigeria on the backdrop of a flawed privatization exercise.

But the government’s economic blueprint for the power sector stated that priority will also be geared towards developing the abundant alternative energy sources such as wind, solar, biomass through a robust Public Private Partnership arrangement.

“To improve access to affordable housing in Nigeria, the document states that between 500,000 and one million houses will be delivered annually within the next four years

This, it stated, would help to increase energy use per capita and also ensure the use of environmentally sustainable energy sources.

It said, “The government plans to allocate N598bn for executing the various strategies and initiatives planned for the energy sector between 2021 and 2025.

“These include measures to strengthen all aspects of the energy value chain including alternative energy sources and improve overall system reliability.

“Nigeria has the resources required to bridge its energy deficit whilst increasing affordability and accessibility. The government will undertake a concerted effort in the 2021-2025 window to leverage existing assets and resources to ensure energy sufficiency for all Nigerians.

“As the transmission network is further optimized and expanded, idle generating capacity will be progressively unlocked so that Nigerians can benefit from the full breadth of available generating assets.

“Priority will also be geared towards developing the abundant alternative energy sources such as wind, solar, biomass through a robust PPP arrangement to increase energy use per capita and also ensure the use of environmentally sustainable energy sources.

“This would improve Nigeria’s business environment and overall quality of life.”

For the housing sector, the government’s plan for the next four years is to attract N3.53trn into the sector to boost housing delivery and guarantee affordable houses for Nigerians.

Nigeria has experienced rapid yet uncontrolled urbanization, which put intense pressure on an already stretched housing infrastructure.

Nearly 50 per cent of Nigerians currently reside in urban areas, which represent almost 100 million people.

Over the years, housing supply constraints and asymmetric information on existing housing policies have prevented Nigeria from keeping up with the rapid urbanization rate.

Also, lack of policy continuity arising from political risk and change of government over the years have stifled government efforts thus, explaining the gap between the availability of affordable housing and the demand due to rising population.

Furthermore, the sector faces other hurdles such as proper land administration constraints; weak adherence to real estate market regulations; unhealthy speculation by stakeholders in the sector; low private sector involvement, poor housing database and mapping constraints as well as rising cost of building materials.

These challenges have all contributed to severely curtailing access to land despite the government’s best efforts to reform the mortgage sector.

But the government’s blueprint for the sector stated that despite these challenges, the increasing demand for housing because of rapid urbanisation could be leveraged as a considerable engine for growth.

It stated that building affordable houses to fill the shortfalls will increase demand for housing-related financing and drive the liquidity of mortgage finance products.

According to the document, massive housing construction will also significantly boost demand for locally crafted materials to reduce construction costs as well as stimulate job creation, particularly in the construction and manufacturing sectors of the economy.

To improve access to affordable housing in Nigeria, the document states that between 500,000 and one million houses will be delivered annually within the next four years.

The document also stated that the government will improve linkages between the housing sector and the economy with emphasis at improving urban development across the country
It said, “To achieve the goals outlined in the housing sector, the estimated public investment is N3.53trn from 2021-2025. This includes an estimated public investment in the urban road development of about N1.68trn.

“These allocations have been made to priority projects in the sector as well as projects essential to the operations of the relevant MDAs.

“Both Federal and state governments will make the construction of affordable housing a priority to bridge any housing deficit, reduce slums and create opportunities for sustainable urban regeneration in Nigeria.”

The document stated that securing the availability of long-term housing financing to facilitate access to home ownership for everyone will ultimately improve social inclusion and allow low-income Nigerians to build wealth.

“The achievement of these goals will be underpinned by an inclusive national housing policy that will fully unlock the socio-economic potential of the housing and urban development sector.

“The operational efficiency of the Federal Mortgage Bank and the Family Homes in collaboration with the Primary Mortgage Banks and the private real estate firms will be a priority,” it added.

On the disparity between urban cities and rural communities, the Federal Government stated that this will be bridged through efforts to engender rural development across all states to ensure access to infrastructural facilities.