Nigeria's Federal Housing Authority (FHA) has adopted a public private partnership (PPP) approach for housing delivery. It is actively targeting foreign companies who are interested to invest in real estate development in Nigeria. TradeInvestNigeria talked to Bar. H.A. Kadiri, head of public private partnership at the FHA.
Can you please explain the FHA’s public private partnership strategy?
The FHA has several models for housing delivery and PPP is just one of them. We have designed guidelines to regulate our relationship with our partners. We have just secured the required ministerial approval for the guidelines.
How can the private sector realise a return on investment by partnering with the FHA?
We operate through a memorandum of understanding and based on cash flow projections on each project. What obtains is that the prospective partner brings in the funds and then we negotiate. They develop the houses and when the units are sold the profit is shared between the FHA and the partner on an agreed ratio. What accrues to the partner depends on the equity stake he has in the project – the more he contributes, the higher profit margin he will receive.
What incentives is the FHA offering prospective investors in the housing sector?
The private sector's main goal is to make profit. Private sector operators are constantly on the look out for a safe place to invest their money which will offer them quick returns. It is easier for us as a government agency to source for land for property development in Nigeria than it is for the private sector. Also, we can get larger areas of land than the private sector and that definitely makes it attractive to work with us. Moreover, the FHA enjoys a national spread in the location of its projects which provides a broader base for prospective partners to operate. The FHA also caters for all income brackets which give a wide range of options to investors in the choice of their target groups.
Name some of the specific projects you are targeting for private sector investment.
We are soon going to place advertisements in the media requesting for prospective partners to join hands with us in the new housing development schemes we would embark upon in Calabar, Lokoja, Lagos, Bayelsa, Kaduna, Katsina, and some other locations.
What income brackets are you targeting in the development of these houses given the high level of poverty in Nigeria?
We are doing mixed developments involving high, medium and low income housing. We are a fully commercialised outfit with zero appropriation from government. We are driven by a passion to provide affordable and decent accommodation for our people but with an eye also on the bottom line because of the need to remain afloat. We are exploring funding opportunities with the Federal Mortgage Bank of Nigeria and multilateral organisations to enable us provide more houses for low income earners. I believe we can provide a decent home for our clients under mortgage arrangements that enable them to spread their repayment over a period of time. It is about finding a suitable payment structure that can accommodate the low income people.
What is being done to improve Nigeria’s mortgage industry?
The FHA is part of a committee on land reforms and affordable housing that was set-up by government to recommend ways of developing the Nigerian mortgage industry. The government recognises the pivotal role of the mortgage sector not only to housing delivery but also for the emergence of a strong economy. Incentives are being worked out to enable banks to commit to long term lending especially for new home owners.
Whose responsibility is it to provide infrastructure such as roads, electricity and water at FHA housing developments?
We make it part of the package that the partner involved also has to provide infrastructure such as lights, water, roads, etc.
What target has the FHA set itself for housing delivery?
In our 60 day action plan we are going to start with the development of 500 housing units in each of the nation's six geo-political zones. We are also targeting about 1 000 units in places like Abuja and Lagos where the demand is higher.
Finally, what is your message to investors looking to invest in Nigeria’s housing sector?
It is common knowledge that Nigeria has a huge housing deficit. This deficit translates to huge investment opportunities. Nigeria's housing sector is where you can be sure that your investment is safe. The FHA is a commercialised agency and a business entity; those who are interested in working with us should know that their money is safe and that they will receive a good return on their investment.
Contact details Investors interested to partner with the FHA should contact Tunde Ipinmisho, Head of Corporate Communications at ipinmisho@gmail.com and H.A. Kadiri, Head of PPP at hakabj@yahoo.com
