Former Minister of State, Federal Capital Territory, Chief Chuka Julius Odom contextualizes the presidential victory of Dr. Goodluck Jonathan and prescribes development imperatives that must drive his administration to transform Nigeria.
He spoke with Osby Isibor.
How will you describe the emergence of President Goodluck Jonathan?
I think that the election of Dr Goodluck Jonathan represents a major landmark in our political history. It scores the first in many respects. First of all, this is a southerner from the minority. Secondly, this is the first time, probably after June 12, that Nigerians came behind one man irrespective of tribe, religion or even background, to speak in one voice that they want change. So, in a sense, it does represent a departure from the way we play politics in Nigeria.
I am very happy because it represents a new dimension to the concept of Nigeria’s unity. You would agree that most of the times when we talk about unity in this country, it all depends on who is talking and from which section of the country and what unity means to that person in the context in which he is speaking. For the first time, Dr. Goodluck Jonathan has come to be a unifying factor for Nigerians of all races, of all tongues and of all religion. I think that it is a development that we can build upon, if we can stand behind one man based on our conviction that this is the person that can lead Nigeria to the next level. I think it is a new development. I encourage that Nigerian spirit. The only dent on this whole thing is the violence that accompanied the release of the result.
I want to put it in proper context. It should not dampen the morale of Nigerians. It should not detract from the significance of the victory. I say this because even our brothers from the northern part of the country, who are patriots, who are true Nigerians, have deplored that violence. That violence was uncalled for. It represents nothing. It doesn’t reflect any shade of opinion other than that of the minority that perpetrated it.
Looking ahead, what do you think are the critical areas the president should quickly commit himself to for the next four years?
If you look at the results of these elections, especially the presidential election, it is an overwhelming endorsement of the president by Nigerian youths. In spite of the handicaps, in spite of the difficulties this segment of the population has gone through in the past few years, it has not dampened their spirits in participating in this democracy. Again, too, it has also shown that we have a stock, a pool of able young men and women in this country who are prepared to participate in the political process, but they need to have jobs. They need to have shelter. So, the most important priority for the President, if I am left to say, is to create employment opportunities for the teeming masses of Nigerian youths that have voted for him. I think that with careful planning, this could be realized in the shortest time possible. One important area where Mr. President can break this jinx is the housing sector.
The housing sector over the period of the last six or seven years, has represented a huge potential for creating wealth and employment opportunities. Our housing stock deficit today stands at about six or seven million homes. This particular sector, which we had overlooked in our economic planning, represents a key index in generating wealth, increasing the GDP as well as creating job opportunities. We cannot continue to provide mass housing, public housing on the basis of cash and carry.
It is never done anywhere in the world. I have repeated this several times. The economic recession that led to the crash in the global economy started with the collapse of the market economy in the United States. This underscores the significance and power of housing in economic stability. This, we can do easily by creating a veritable and strong platform for mortgage backed housing financing. This can easily be achieved if we strengthen the secondary market institutions, the secondary mortgage institutions, the lending capacity of the institutions to lend onward to potential home owners over a long period of time. These loans must be secured by government bonds.
There is no way individuals can provide housing on the basis of cash and carry. Government must intervene. What some of our economic and policy planners fail to realize is that even in the so-called developed countries, housing is highly subsidized. It is heavily subsidized in the US; it is heavily subsidized even in the Asian countries. Now, if we create a pool of funds that individuals can draw from over a period of twenty-five, thirty years to repay for their houses which will be available on certain conditions, then the housing booms, construction boom that would emerge as a result of the demand on the housing needs of Nigerians, would create more than a million jobs in less than ninety days. It is possible; it can be done; it is not rocket science. We have done this from the perspective of the committee the federal government set up on land reform.
If the recommendations of that Prof. Mabogunje’s committee are implemented, we will achieve tremendous job creation, we will achieve tremendous mobility in the sector for the young people. I think housing is one sector we must focus attention. Of course, there are so many other areas that would generate employment for the young people, which would increase capacity building in terms of GDP. Look again at the fact that if the multiplier effect that would come as a result of increased tempo in construction activities, it would reflect in both the building material market, it would reflect in the low skill market of masons and artisans of all sort. If you couple this with the increasing level of power steadiness, you will see the amount of jobs that can be created. Of course, a number of people have pointed to the fact of unregulated building material market. For instance, the cement supply chain in Nigeria must be looked into by government before it becomes a monopoly.
How do you think that government can solve some of the problems that cropped up as a result of the sale of government houses?
That is a very good question. The number of houses that government put up for sale to the general public does not represent up to .000.1% of the market demand for houses. How many of the houses are we talking about here: few houses put in a couple of estates? Do you know the number of people in this Abuja that are in need of housing? Again too, the type of houses we are talking about is not of the nature that is being auctioned by government. Most times some of these houses that government sells are for high income earners. What we are talking about is mass housing, affordable houses. In fact, the key word here is affordable housing. Government can do one or do things. Government can decide to acquire land and deliberately embark on a policy of housing supply through building societies as is done in some other countries. Or through consumer oriented organizations that will source loan form one digit interest facilities that would be available.
Right now, there is no such facility available. Nobody can build any house, whether for commercial purpose or for personal use on a double digit interest rate. There is no way you can meet up. The interest rate cannot exceed 5% maximum, usually it is less than 3% or 2% so that you can spread the repayment schedule over a period of 20-25 years. Only government can create such a pool of funds. It is really difficult for the private sector, because the idea is profit. The banks do not lend money on a long term basis for housing construction.
Instead of efforts by government to force financial institutions to create special funds for housing, they set up mortgage arms in the various banks. But go and look at the records. How many houses have been delivered as a result of these various arms of banking institutions that are dedicated to mortgage financing?
The truth is that they set up these arms to satisfy regulatory requirements. The lending portfolios of these mortgage institutions run by commercial banks represent less than 3% of the housing demand funding. There has to be a special funding that will be a source of ready fund for mortgage housing. That can only be created if the amount of money is at the government behest. It is run in a fashion that the funds will be available in a transparent manner.
The Federal Mortgage Bank is a government institution that was created for this purpose. The truth really is that their funding capacity to meet this housing demand does not exist. Even the National Housing Fund collection, which the Federal Mortgage Bank imposes on people who benefit from these loans does not represent up to 5%, maximum 7% of the housing loan demand in the country. So, there is really a vacuum there. My concern here is that government should not look at it from the point of view of giving loans or providing funds for housing. They should look at it from the multiplier effect it would have on the economy. They should look at it from the job creation potential that such a policy would engender.
From your analysis, if funds are made available for provision of housing, from your own estimation, within the next five years, if the capacity of the Federal Mortgage Bank to lend or to provide cheap mortgage, what figure would you propose?
The truth is that we really have to take off to know what the supply chain would look like, because every supply is backed up by demand. What we know is that under the United Nations’ definition of housing, a lot of people are not actually living in houses. A house is an environment that creates both physical health of environment, mental and spiritual satisfaction of the occupant. Now, somebody who is living in a shanty that has no access to electricity or water, or sewage, is not living in a house. By that definition, you find out that if we apply is strictly, some of the people who are living in these our estates are actually squatters. They are living in shanties. The demand for these houses would be based on the amount of money, funds available to primary mortgage institutions.
The PMIs have done tremendous jobs, because they have been able to collect very robust data of people who need this funding. But the truth really is: how much money is coming from the secondary mortgage institution, which is the Federal Mortgage Bank? Are they meeting the demand? Most of the people who applied for these loans have been on the queue for more than six or seven years. They have not been able to obtain these loans.
Don’t also forget that the astronomical rent that we experience in Abuja and other mega cities is as a result of a demand and supply chain issue. If a lot of the people who live in the satellite towns are properly accommodated, government provides basic infrastructure, creates roads, and then allows them to develop their plots the way it is done in China and some of these other Asian countries. And then you provide the funding for them, put a proper regulatory capacity to ensure that those funding are put exactly into housing construction. And in the interest rate, it is reduced to a certain level which is also paid off while the deductions are being made in the income of the occupier, the owner occupier, you find out that we will create quite a pool of housing within a very short time. I wouldn’t be able to know the exact figures, but I believe that, given the demand right now, substantial job creation opportunities exist therein.
What do you think is responsible for government not being able to create the platform for mortgage financing?
It is lack of political will. It is lack of political will to bring the funding that is required. You see, the money we are talking about here is quite huge. It is enormous. We are looking at the first one year, a budget of about N60 billion as seed fund for this purpose. Each time the presentations are made, of course, the budgetary system is difficult. The money is not inexhaustible and there are competing needs, so government has to rationalize funding. Again, I think it is ignorance on the part of policy makers. This particular funding is as important as education. It is also as important as security.
We are talking about something that will create so much employment. We are talking about something that will fulfill one of the basic needs of the citizens. That is proper housing. The multiplier effect it will have on the economy will be reflected even in the growth capacity of other sectors of the economy. Don’t forget that government might have the intention or desire to appropriate such amount of money, but it is not an easy sail at the National Assembly to appropriate.
Most times when reasonable amount of money is appropriated to the Federal Mortgage Bank, once it goes to budget defense, they see it as money meant for one small government parastatal. Sometimes, the way some of these parastatals operate has not helped their case in the way they manage the resources that are available to them. So, the fear always is that these funds will not be properly utilized. That if you put these money down, the policy objective would not be achieved and the housing project would not be executed.
Government is always suspicious of how these funds allocation would end up, how it goes. I think that with proper enlightenment, with proper regulatory capacity, with proper legislative platform, these funds can be properly administered without it being diverted to administrative costs.
If failure can be recorded in a water-tight established situation like the US, what leeway do you suggest to solidify the kind of huge fund s you are advocated for Nigeria?
Why this is important is because there is no substitute for it. There is no economy that can develop to global economy if you don’t address the housing issue. The housing issue lies at the root of proper economic take-off. Why it is important is that it is one of the components where aggregation of funds, aggregation of values is domiciled in every country. If you now auction all the houses in Abuja, you will be amazed at how much government can generate from such a sale. Now, if government is in a position to create a pool of funds where we can replicate the number of houses we have in Abuja in another two years, the value will increase because real estate does not collapse and there is no where in the world that value of properties decrease. There could be slow down in the growth capacity, but it is always temporary. The same amount of money you spend in buying a property in Abuja will probably double in the next four years. It doesn’t matter, it continues that way. In the same twenty years, properties here would have appreciated over twenty times.
It is a sure source of solidifying the economy, if you can empower…even elementary common sense would tell you that if you have five people in this town and you empower them to own five million houses, you have created wealth beyond imagination and you have invested that wealth in your citizens, because they have that money. They didn’t consume it. It is not consumer based expenditure. It is value based expenditure. What government does is that it continues to reap by way of interest on those.
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