The Group Managing Director of COPEN Group, Ugo Chime, sets agenda for the housing sector in this interview with
It has been a very good opportunity for me. What we try to do was to work on the fundamentals that were created by predecessors, principally Alhaji (Dr) Lateef Jakande, former Governor of Lagos State and then former minister. He was the foundation president of REDAN. He tried and went around the country to solve the need of the masses for housing and even housing for socio-economic development. That was the vision he had as the governor of Lagos State and that was the vision he had also working as a minister of the Federal Republic of Nigeria between 1994 and 1996. What he did was to design a vehicle of eliciting private sector developers to engage in the act of providing houses. When I came in as the president, I saw that this effort was already going on; but something was still not there and that was the means of ensuring that the knowledge base of the developers is efficient. So, we decided to organise training because we saw that a lot of developers did not understand the multidimensional and multifaceted nature of the professional knowledge required to be effective in delivering end-to-end-from conceptualisation to facility management of real estate activities.
I was there as the head between 2015 and 2020. So, by 2012 when I was a member and I saw that we had 85 per cent failure of projects undertaken by members, which was incredible. What we needed to do was to ensure we train our members. We had a meeting with SKUMO to be able to ensure that our members understand some of the people who wanted to use the sector for money laundering and other negative activities.
We started also the process of endorsement of products and processes. We looked at your administrative setup and approval process. The compliance issues are the pathway to ensuring that we have a genuine property for sale to members of the public. We did that because currently in Nigeria we discover that we cannot sell pure water without registration by NAFDAC. But you can sell a house worth a hundred million without anybody certifying the product, without anybody assuring that it is okay. That is something that should not happen. These were some of the things that we started to do – engaging in registration and engaging in partnership with other institutions. We were able to acquire land to be able to develop REDAN House. Before I came in, there was no land. We acquired land and started the development. We were also able to engage with 14 other institutions, including the World Bank and the Central Bank of Nigeria, to be able to create what we call the Nigeria Real Estate Data Collation and Management Programme, to be able to gather data for planning, because as an investor you need planning. And planning cannot take place without data. We found out that because of a lack of data, investment in the real estate sector became a dangerous exercise. This is so you do not know what you are going to meet. We needed to get data. So, we were able to work with all these institutions, including the Nigeria Population Commission, Nigeria Bureau of Statistics, Federal Mortgage Bank of Nigeria and Nigerian Mortgage Refinance Company. That was one of the things I did in 2017, to ensure that we have a veritable platform for collaboration on data gathering, management, and publication so that people can have the data they need for planning to be able to know the absorption capacity of an area.
The sector holds a very huge potential because a lot of things are on the ground. What we needed is to make sure that we now implement a lot of these things. First, the contribution of the mortgage sector to the GDP is 0.5 per cent in Nigeria. The contribution of the mortgage sector to the GDP in South Africa is 16 per cent. Nigeria has a bigger population than West Africa. If what we are doing by way of mortgage, for instance, is only 0.5 per cent of our GDP, when we upscale it to that, it allows 25 per cent of the Retirement Savings Account by pension fund contributors to be used for housing in terms of equity financing for their homeownership. If you remember that you have N16tn in the pension fund, that means 25 per cent of that is N4tn. The total amount Federal Mortgage Bank of Nigeria has used over the number of years that they have operated is less than N200bn. Now, if you have N4tn which is 20 times the volume that you have available now. I remember this one was invested by Federal Mortgage Bank over a decade ago.
So, the outlook is there. But what is required is for us to create interfaces, a collaboration between the government, the private sector, between agencies in the private sector so that we can design veritable and functional transaction dynamics, a value chain, and a roadmap that will take advantage of all these improvements and opportunities and direct them in a seamless manner so that we do not lose it in a noise of trying to have each silo organisation working on its own. There are a lot of opportunities in the sector and if we are able to sit down, get the data, work together, and understand what the challenges of each organisation are, the pension commission will not release those funds.
What we are trying to do in that regard is to create a comprehensive database of our members in order to track their activities. During my tenure in 2018, I created endorsement of products and processes, which means REDAN as a self-regulatory organisation goes to look at members’ projects. Did you get the building approval? Is your title to that project okay? Is the house you are building in consonance with the building code? All these things we decided to check with the Nigeria Institute of Building. We were also working with the Nigeria Institute of Architects so that the professional bodies in conjunction with REDAN will sit down together and say okay we are going to manage this process. We are going to create this endorsement. So, once you say that you have met those criteria, we would be able to publish the list of estates that are compliant so that buyers can beware. If you are buying from any other person, we can tell you that this organisation has not been able to meet up with its obligations to clients in the past. They have abandoned projects. They have abandoned obligations to people after issuing them offer letters or whatever it is.
We have a disciplinary committee. So, if there is any case of default or deviance that we noticed or are reported to us, we have a disciplinary committee and we will be able to take decisions and apply the necessary decisions. And then let the members of the public know that this is what we have done.
The nexus has been created. We started canvassing for this about seven years ago and the pension fund and national housing fund which workers are contributing should be accessible to them for homeownership before they retire because of the loss of purchasing power. N5m five years ago is not the same N5m today in terms of what it can purchase. So, why are you keeping the money for the person for retirement when the money is losing value? When the person retires the value of the money is less than 30 per cent of what it used to be 10 years ago. So, they have opened a portal. That is why PenCom has come out with a policy that allows a worker to access 25 per cent of what is in his or her Retirement Savings Account, to be able to pay for equity for homeownership, while a primary mortgage bank, Federal Mortgage Bank or any other institution will provide the remaining loan amount. That is a good development.
I want President Bola Tinubu to see housing not as a help to the poor masses, but as a means of engendering productivity in the economy. COVID-19 has shown us that we cannot ask people to keep social distance when they have only one room containing 10 people. Where will the rest go and sleep? Also, from the health angle, we have also seen a lot of crime in densely populated areas because it is difficult for police to go into a slum. So, it is a security challenge.
One of the first things he should do is to see housing not as helping the poor people, but as a means to providing for health needs, increasing productivity, security and employment for the teeming youths of Nigeria. The unemployment rate is over 60 per cent of the youth and that is a time bomb. That is why there is a lot of aggressiveness. So, I will advise the government that can you have a paradigm shift in your understanding of what it represents in the housing sector. It is a veritable means to an end that we want to achieve in the area of employment generation, security, health and others.
There is a need to reform the FMBN Act, which has been in existence for so many years. In 2007, they submitted an amendment that the Act should be reviewed and that is the correct thing. The Act should be reviewed because as it were today, the problem of the Federal Mortgage Bank is arising essentially from the “there is no ownership” mentality. The workers, who contribute money through the national housing fund, have not seen how it is being done. The employers, who are eager to see their workers’ houses, have no say. It is the government that sits down and appoints people to manage funds that do not belong to it. That is a major problem. When people talk about the National Housing Fund, all these are manifestations of the structural problems in terms of ownership, control, and management of the Federal Mortgage Bank.
So, there is an urgent need to restructure Federal Mortgage Bank, to equip it to make it more efficient and more responsive to the need of the workers. As of today, the board and management of the Federal Mortgage Bank are not reporting to the workers. They are reporting to people who sit down and appoint them.
