By Terungwa Isaac
Abuja — The impact of Covid-19 on the Nigerian economy is profound. Nigeria’s economy was on the path of recovery from the 2016 recession before the pandemic struck. Growth slowly rebounded in 2017 and 2018 in part because of rising oil prices, increase in agricultural production and services. By 2019, Nigeria’s annual Gross Domestic Product (GDP) peaked at about 2.2 percent.
However, efforts of governments to contain the virus combined with the volatility and collapse of global oil prices have put the brakes on economic activity erasing the rebound and modest gains made in recent time.
This development is worrisome. What started as a health crisis has seeped malignantly into every facet of society including the housing sector. The pandemic has significantly weakened national finances and compromised emerging pillars of economic growth.
The World Bank in a recent report titled, “The Nigeria Development Update: Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery,” predicted that in 2020, Nigeria’s economy is expected to experience its worst recession in four decades. In the baseline scenario, the report says that the economy would contract by 3.2 percent this year.
This assumes an annual average oil price of $30 a barrel. It also assumes that the spread of COVID-19 eases by the end of the second quarter and is contained by the third quarter of 2020.
It added that with the uncertainty of the long-term economic impact of the global COVID-19 (coronavirus) pandemic, the speed, quality, and sustainability of Nigeria’s economic recovery will be determined by the effectiveness of its government’s response.
The broad import of this analysis is that governments at all levels and leaders of institutions that are designed to stimulate growth of critical sectors of the economy must redouble efforts to ensure quick economic recovery.
It is against this background that the ambitious efforts and initiatives of the Federal Mortgage Bank of Nigeria (FMBN) to ramp up housing stock development is so vital.
FMBN Mini Cities
One of the latest of such initiatives is a plan to finance the development of FMBN Mini Cities. The project targets the development of 20,000 housing units annually over the next five years and is to be implemented in collaboration with reputable real estate developers. According to the design, each project site planned to host between 1,000 to 2,500 units per project site. The house types include two bedrooms, 3 bedrooms and some terraces to cater for different income categories of Nigerians.
According to the plan, off takers – that is – persons that are interested in purchasing the houses through loans that will be provided by FMBN, would to be profiled at the inception of each project with strict adherence to the delivery timeframe.
and 2.5 indirect jobs.
The big idea is that the projected increase in housing construction owing to the FMBN housing projects would help to accelerate economic recovery and promote economic inclusion by creating thousands of jobs for craftsmen and artisans such as masons, plumbers, welders, electricians, and painters
The National Affordable Housing Delivery Program
Interestingly, the FMBN Mini Cities project and 5,000 Housing Delivery Plan would build on the momentum of the National Affordable Housing Delivery Program for Nigerian workers, which the FMBN is already implementing in partnership with the Nigeria Labor Congress (NLC), the Trade Union Congress (TUC), and the Nigeria Employers Consultative Association (NECA).
In the first phase of the programme, about 2,600 housing units are being delivered in thirteen (13) states across the six geopolitical zones of the country in addition to Lagos and Abuja, in batches of a minimum of 200 units per zone. House types include finished semi-detached bungalows as well as 1-, 2- and 3-bedrooms in blocks of flats.
Under the phase one, the FMBN sought and received five hectares of land from the participating states, while it provided construction finance to reputable estate developers to carry out the construction work. Potential beneficiaries are workers that are registered with the National Housing Fund (NHF) Scheme and contribute 2.5 per cent of their monthly income.
It is a good thing to note that the second phase of the FMBN and Labour National Affordable Housing Delivery Program for Nigerian workers is about to start as stated by the FMBN MD/CEO, Arc. Ahmed Musa Dangiwa. According to him, the bank is now requesting interested State Governors to provide up to 10 hectares of land for the siting of the expanded housing scheme in their states.
In conclusion, today’s unprecedented crisis will require an equally unprecedented response from the entire Nigerian public sector, together with the private sector. The Nigerian economy is expected to contract in 2020 by at least 3 percent. The slump in global oil prices will slash exports: more than 80 percent of Nigeria’s exports derive from the oil sector. Against this backdrop, the FMBN housing initiatives being planned in line with the National Economic Sustainability Plan (NESP) of the federal governments will contribute towards stimulating inclusive economic growth and driving recovery. It is therefore important that government and relevant stakeholders in the housing industry support the Board and Management of FMBN as they work to achieve these laudable plans.
Terungwa is a policy analyst based in Abuja.