AN EVALUATION OF THE ROLE OF PRIVATE ESTATE DEVELOPER IN THE PROVISION OF AFFORDABLE HOUSING

AN EVALUATION OF THE ROLE OF PRIVATE ESTATE DEVELOPER IN THE PROVISION OF AFFORDABLE HOUSING

(A STUDY OF CITEC PROPERTIES LIMITED ABUJA)

ABSTRACT

This project is an attempt to evaluate the role of private estate developers in the provision of affordable housing (a study of CITEC Properties Limited Abuja). The specific objectives of this study is to evaluate how CITEC have achieve a sustainable approach of providing affordable housing to the residence of Abuja and identify the means of facilitating affordable housing supply by private estate developer in the study area. The reviews makes concerted effort to review past literature on the research topic which covers concept of housing needs, the current housing delivery approach in Nigeria, the rationale for private sector involvement in housing delivery in Nigeria, major private actors in urban housing provision in Nigeria and impact of private estate development in the provision of affordable housing. Survey design was adopted for data collections, this enable the research to make use personal observation, interviews and questionnaire to gather relevant data for the purpose of the study. Data were presented and analyse using tables, percentages and descriptive statistics. The findings of the study reveals that private estate developers play significant roles in the provision of affordable housing which mostly achieved through mortgage financings and public private partnership. Based on the research findings the research recommends that the government should create enabling policy, provision of land and financings which will enhance the effectiveness of private estate developers in the provision of affordable housing in Abuja and Nigeria at large.

CHAPTER ONE

1.0       INTRODUCTION
1.1       Background of the Study

Housing represents one of the most basic human needs and has a profound impact on the health, welfare, social attitudes and economic productivity of the individual. It is also one of the best indications of a person’s standard of living and of his or her place in society. Despite this essential role played by housing as a basic need, an adequate supply of this commodity has been lacking in virtually all societies throughout history. The situation is particularly serious in the developing countries where population growth and urbanization are increasing very rapidly and where the gap between housing need and supply is greatest. This condition remains because housing has typically been regarded as an unwanted stepchild, a frustrating nuisance in the family of projects that constitutes development or economic programmes. Paradoxically, past theories of economic development regarded housing as a non-productive, durable consumption good or service with an extremely high capital output ratio. Nigeria belongs to the category of countries where the above conditions prevail. (UN-HABITAT, 2006).

Availability of decent and affordable housing has been inadequate in virtually all places and almost throughout history. This is more pronounced in developing countries where rapid rate of population growth and urbanization is unmatched by corresponding and commensurate change in social, economic and technological development. (Mabogunje, 1978). Thus, this phenomenal rise in population, spontaneous increase in the number and size of most Nigerian cities have in the past few decades led to acute shortage of decent and affordable dwelling units. The outcomes of this developmental process are diverse urban problems ranging from overcrowding, deplorable environment, poor living conditions, inadequate and poor infrastructural services, homelessness and other related problems (Federal Government of Nigeria, 2004; Olotuah and Ajenifujah, 2009; Jiboye, 2009).

In many countries the private sector plays an important role in housing development. It constructs housing either for sale or rent for different income groups. The private sector should participate in the construction of housing for all categories of the population either for sale or rent, manufacturing and supply of building materials in the housing construction sector, infrastructure development for human settlements and encourage members of communities to improve their living environment through community participation in projects.

In Nigeria a number of efforts have been mustered to solve the housing problem; from the most discernable and debut of the Lagos Executive Development Board (LEDB) in 1928 till now, a satisfactory level have not been achieved. The achievement from the changing finance mechanisms, material and construction technology development, delivery mechanism etc over the years is minimal and therefore calls for deeper and wider thought towards means that is all-embracing, meets other societal needs yet accelerating the enormous task of housing the nation’s teeming population (Bayode, 2008).

The housing sector plays a more crucial role in the country’s welfare as it directly affects not only the well-being of the citizenry, but also the performance of other sectors of the economy. In recognition of this, the Nigerian government has over the years initiated policies and programmes to address the housing challenges, but with little/no success. Experts have put the housing shortage in Nigeria as at 2005 at between 12million to 14 million (Adejumo, 2008: Oluwaluyi, 2008). According to Babade (2007), to adequately house the urban population in Nigeria, a conservative figure of 409,227 housing units should have been constructed in 1990. Due to neglect, the figure rose to 783,042 units in 1995; 1,333,176 units in the year 2000; 1,543,318 units in 2003 and 2,171,603 units in 2010. This is serious considering the poor showing of the housing sector.

Sustainable housing provision is the gradual, continual and replicable process of meeting the housing needs of the populace, the vast majority of who are poor and are incapable of providing adequately for themselves. It ensures housing strategies that are stable and are not subject to changes in the political circumstances of the country.

Sustainable housing provision requires proper definition of housing needs, and the participation of the private sector. The private sector faces a number of difficulties in housing provision, which hampers it in large-scale construction. Housing provision is enormously costly and the private sector, which is essentially profit-driven, cannot be expected to produce a socially optimum output with adequacy in quantity and standards, neither can it allocate housing resources equitably. This is due to distinct peculiarities of housing such as its heterogeneous nature, high production costs relative to income, high transaction costs and low elasticity of supply.

This study in the light of the various discourses made about housing matter, has attempted to critically evaluate the role of private estate development in the provision of affordable housing without government direct participation.

1.2       Statement of the Problem

The pooled effect of high population upsurge and urbanisation in a declining economy has thrown Nigeria into serious housing problems. Ironically, the low-income groups who constitute the majority in the Nigerian society are the most affected by the finance menace. The problems of housing shortage grow worse by the day in many developing nations including Nigeria. Conceivably, a major trait of housing crisis notable in urban centers in most developing nations is that of inadequate supply relative to demand (Olotuah, 2000). Despite the housing situation in Abuja and other states of the federation, residents make out ways to survive like in most cities of the world where residents are plagued by inadequate housing. Furthermore, private developers as a compassionate housing providers performance need to be compare whether they are performing to the much expectation of residents in their need of housing supply. It is on this premise that the research seeks to evaluate the role of private estate development in the provision of affordable housing with a particular reference to CITEC Properties Limited Abuja.

1.3       Aim and Objectives of the Study

The aim of this project is to evaluate the role of private estate development in the provision of affordable housing with a particular interest in CITEC Property Limited Abuja.

To achieve this aim, the following specific objectives shall be pursued:

1. To evaluate how CITEC have achieve a sustainable approach of providing affordable housing to the residence of Abuja
2. To identify the means of facilitating affordable housing supply by private estate development in the study area
3. To evaluate the role of CITEC Properties Limited Abuja in the provision of affordable housing.
4. To assess the likely constraints limiting performance of private development in the study area.

1.4       Research questions

The researcher shall find answers to the following research questions as it will serve as a guide towards achieving the aim and objectives of this research.

1. How have CITEC achieve sustainable approach towards providing affordable housing   to the residents of Abuja?
2. What are the means to facilitate affordable housing supply by private estate development in Abuja?
3. What are the role of CITEC Property Limited Abuja in the provision of affordable housing
4. What are the possible constraints limiting the performance of private development in the study area?

 1.5       Significance of the Study

The study will reflect Housing provisions and its adequacy as the key issues in the survival of man. This will be a awaken call to improved performance of private developers to strength further in the provision housing stocks within the Nigeria, as such It also provides the rationale for developing an effective housing policy framework towards achieving sustainable urban development in Nigeria. In concluding, the research posits that existing policy framework guiding sustainable housing and urban development must be made relevant and effective in addressing both the present and future housing needs.

Empirically, this study is an evaluation of the role of private estate developer in the provision of affordable housing in Abuja with a particular interest in the contribution of CITEC Property Limited Abuja to the provision of affordable housing to the residents of the Federal Capital Territory Abuja.

The results of this study will help the policy-makers and executors to know the relevance of private estate developers in the provision of affordable housing so as to avoid the pitfalls or gray areas inherent in partnering and providing enabling environment for their effective operation.

Theoretically, the study will serve as a contribution to knowledge regarding the contribution of the role of private estate development in the provision of affordable housing as a viable option for housing delivery in Nigeria and Abuja in particular. More so, it serves as a reference material for administrators and policy-makers at all levels of government.

 1.6       Scope and Limitation of the Study

In terms of scope, the study will evaluate the role of CITEC Properties Limited Abuja in the provision of affordable housing. Due to limited time and resources the study will cover the contribution of other private estate developers in the study area. The study will examine in details the dominant issues of private estate development as an option for housing delivery in Abuja.

Limitations

The study of this magnitude cannot be completed successfully without the researcher encountering some constraints or limitations. Therefore, this work will not pretend to be containing all holistic information on the role of private estate development in the provision of affordable housing in Abuja, rather it will endeavour to highlight the dominants issues on the justifications and challenges of private estate development as an option for affordable housing delivery in Abuja.

The major limitations includes: paucity of data or near absence of reliable data on the theme of the study, especially in hard copies, being a novel public management strategy in Nigeria.

1.7       Operational Definition of Terms

Private: According to business dictionary private is any tangible and intangible things owned by individuals or firms over which their owners have exclusive and absolute legal rights, such as land, buildings, money, copyrights, patents, etc.

Estate: According to Merriam Webster an estate is the degree, quality, nature, and extent of one’s interest in land or other property.

Housing: According to Business.com online dictionary, housing is a building or structures that individuals and their family may live in that meet certain federal regulations. Different housing situations vary for individuals and may depend on age, family, and geographic location.

Property: According to Dictionary.com property is anything that a person or business has legal title over. Property can be either tangible or intangible, and having legal title to it grants the owner certain enforceable rights. Typical examples of a tangible property include real estate, also known as real property, vehicles, furniture, and equipment.

 1.8       Background of the Study Area

Incorporated as a limited liability company in the year 2001, Citec Properties Limited Abuja began work at the Mbora district of Abuja in 2001 having secured the understanding and approval of the Federal Government to deliver houses for low income earners at its Mount Pleasant Estate on about 230 hectares of land provided by the Federal Government. Today, the estate boasts of the best infrastructure by any estate developer in the FCT.

The mission of CITEC Properties Limited is to provide top quality housing for Nigerians in life enhancing environments using experienced and qualified personnel working with the best technology available.

The core values of CITEC Properties Limited includes

• Professionalism
• Integrity
• Excellence
• Team Work
• Innovation

Mount Pleasant Estate where Citec targets about 3000 housing units features underground central sewage system, tarred internal roads with pedestrian walkways, recreation areas, school, shopping mall, worship centres and other modern facilities that make it unnecessary for residents to look outside the estate for further services.

With Mount Pleasant Estate, Citec has redefined standards and offered The Federal Capital Territory residents a wide range of top quality houses with exquisite finishing in a homely environment. Before embarking on the Mount Pleasant Estate project, Citec, in partnership with the Federal Housing Authority had built over 300 housing units of various types at its Citec Villas in Gwarimpa II Estate which has become the reference point in the Federal Capital.

CITEC Nigeria Limited has mandate under the Partnership with the Federal Housing Authority to complete 308 housing units of different house types. The partnership agreement was signed in the month of February, 2001 and mobilization to site began in the month of June 2001. Among the conditions agreed upon was a 12-month completion period. Field surveys show that only 65% of total housing units completed were within 2001 to 2004 — a period of four years. And the remaining, 35% completed between 2004 and 2006, another additional two (2) years.

The project was financed by commercial banks with very high interest rate of 32% between 2001 and 2004 which later rose to 36% in 2005. The 308 units were however completed in 2006, with project duration of six (6) years instead of 12 months as planned. However based on the detailed partnership agreement signed by the two partners on a 60:40 percent profit sharing between CITEC and FHA respectively, the expected operational profit per unit of total housing units are projected based on the assumptions that the housing units will be completed in good time and sold. There are four housing categories in Gwarimpa II partnership scheme. All the house types do not reflect the status of low and middle-income earners, but strictly for high income earners.