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Wednesday, February 28, 2024

FHA at 50: Time for soul-searching

When the Federal Housing Authority (FHA) marked its 50th anniversary at an event organised by the Authority in Abuja on Thursday, November 23, 2023, it was more of a rebuke than plaudits for FHA.

Ahmed Dangiwa
Ahmed Dangiwa, Managing Director, Federal Mortgage Bank of Nigeria (FMBN)

Delivering his speech at the commemorative event, the Minister of Housing and Urban Development, Architect Ahmed Musa Dangiwa, did not mince words about the FHA’s laggard performance.

Hear his verbatim statement: “Before the agency’s commercialisation in May 2013, it managed to deliver37,000 houses in its 14 years of existence, while ten years after, records    showed that FHA delivered just over 50,000 housing units(?), an average of 1,000 houses in five decades.”

He opined that “this is not acceptable, especially from Nigeria’s foremost housing agency that has so many institutional advantages that it can leverage to deliver more results.”

Not done yet, Dangiwa further lamented, “I am also pained to say that analyses of all the PPPs (Public-Private Partnerships) that the FHA entered into over the years have delivered little or no value to the country. Again, this is also not acceptable. FHA needs to wake up to its responsibilities.”

Finally, he admonished, “FHA must see this 50th anniversary as a moment of soul-searching (my emphasis) and resolve that the next 50 years will tell a different story. As they say, we cannot change the past but shape the future by doing things differently.”

FHA’s Panoply of Challenges

Policy inconsistency: The FHA suffered from inconsistent policy direction over the years. There was policy ambiguity concerning the exact roles the Authority should play in housing delivery. At their whims and caprices, successive administrations kept tinkering with the functions of the Authority to the detriment of its performance.

First, the Authority was partially commercialised in 1992 under a Tripartite Performance Agreement, which gave the Authority operational autonomy as a corporate business entity NOT under the control of the government. By this, the FG redefined the role of the Authority to enable it “to develop and manage real estate on a commercial and profitable basis in all States of the Federation, provide sites and services for the high-income group in the major cities of the country; and provide low-income houses in all the States of the Federation from funds allocated by the Federal Government.”

In 2006, there was another policy shift in the roles delegated to FHA in housing delivery. The Authority was fully commercialised and mandated to mobilise off-shore funds for housing delivery.

Gwarinpa Housing Estate Debacle: After the commercialisation, the performance of the FHA in housing delivery failed to make a significant impact. The lowest ebb of FHA performance became pronounced in 1996 when the Authority embarked on a massive development of a large housing estate at Gwarinpa in Abuja (under the then administration’s National Housing Programme) without any feasibility studies and detailed business plan based on a proper analysis of its capacity to execute such an enormous housing project.

The Gwarinpa Estate was then the Authority’s main commercially oriented housing scheme, located on a total area of 1090 sq hectares of land with a designed capacity of 4669 mixed types of housing units to cater to medium- and high-income earners.

The Gwarinpa Housing project gulped a substantial working capital of the FHA, leaving it in a state of colossal indebtedness to numerous contractors (both imaginary and authentic), many of whom abandoned their sites because they were not paid on time for the job done according to the contractual agreement they had with the FHA.

The Authority found itself in a catch-22 situation. Having invested so much in the development of the sprawling estate, which was left in an untidy condition not attractive to prospective house buyers, the avenue to recoup its colossal investment was arduous because most high-income houses were not entirely ready for sale. In addition to its financial predicament, the FHA was deluged with court cases instituted by aggrieved contractors who sued the Authority for either non-payment of work done or breach of contract.

Stiff housing competition and marketability issues: Since it was commercialised, the FHA has not been able to compete favourably with other private sector Real Estate Development Companies operating within the same competitive housing market environment with better houses compared to low-quality homes built by unscrupulous FHA contractors. Most FHA houses were poorly constructed by incompetent contractors who indulged in sharp practices using low-quality building materials, non-engagement of professionals, and not paying attention to minute details about building/environmental aesthetics.

Lack of suitable Corporate Structure: One of the main challenges of the FHA over the years was the lack of a well-grounded administrative structure to handle the enormous responsibilities thrust on the Authority effectively. Allegations of maladministration by successive leadership and profligate Board were rife. Staff recruitment was carried out indiscriminately with undisguised favouratism and ethnicity, not on merit and the basis of need. The workforce was often unwieldy, with substantial monthly wage bills, financial recklessness, contract award abuse, widespread venalities, and a virile staff unionism resistant to change.

Informed by all these foibles/ limitations, the then supervising Ministry(FMHUD), in 2005, commissioned KPMG-a reputable international firm, to conduct a holistic study/review of the FHA focusing on its mandate, operational framework, activities and programmes, workforce skills and competencies and financial standing.

FHA short-lived Transformation

The result of the diagnostic review of the Authority by KPMG was a priority recommendation on transforming the FHA to an outfit with a revised mandate different from its subsisting operative order, among other wide-range suggestions.

The Federal Executive Council (FEC) approved that the FHA shall henceforth be “an organisation focused on the provision of social housing to low and middle-income groups, and special groups of the economy and commercial sites and infrastructure to middle and high-income groups of the economy in all States of the Federation and the Federal Capital Territory (FCT).”

To actualise its new mandate, the then Minister of Housing and Urban Development, Amal Pepple, got approval from the Federal Government to set up a six-man Technical Board with an Executive Chairman in the person of Brigadier-General Tunde Reis, an architect and a tested hand in real estate and cooperative housing development. This writer was engaged as a Technical Consultant by the Technical Board.

As soon as the Technical Board was inaugurated, it hit the ground running. The Board developed a robust plan for the transformation of the FHA. It engaged the service of KPMG, which later developed an elaborate Social Housing Framework in line with the FHA’s new mandate. Within its short tenure, the Technical Board made some meaningful impacts in restructuring and setting the Authority on the right path to achieving better corporate governance.

But, unfortunately, the staff union vehemently opposed such an arrangement because mass retrenchment of redundant staff was inevitable. There was also petty politics at play because of the appointment of military personnel as the Executive Chairman serving under a democratically elected civilian administration. This led to discontent and staff union demonstrations. Eventually, the marvelous job of the Technical Board was.

Social Housing delivery should be the primary focus of the FHA

The FHA needs self-introspection, as Dangiwa advised. The Authority cannot always do the same thing all the time and expect a different result. The FHA has lost focus on its revised mandate in line with the report of the KPMG, 2007, which recommended that the Authority concentrate more on mass housing for low and middle-income groups and commercial sites and infrastructure for middle and high-income groups of the economy.

The low- and middle-income groups are the majority of the population in need of housing, so priority attention should be given to them by the Authority through affordable social housing with a more extensive spread of beneficiaries.

The needs of high-income earners are better served by providing land for housing development serviced with road infrastructure, a form of site and service scheme instead of building costly houses, which may end up not being sold by the Authority for reasons of quality and choice by prospective buyers compared to elegant homes built by private sector developers.

In essence, we advise FHA to serve the housing needs of most Nigerians, not the few high-income people in the lower percentile who have adequate resources to cater to their housing needs. In other climes, government housing agencies build social housing (e.g., council houses in London and multi-dwelling accommodation in most US cities mainly for specific income brackets.).

The Authority must listen to the wise counsel of Dangiwa: He wants to see the FHA going to the capital market, issuing bonds, raising funding for mass housing projects across the country, marketing them, paying back the loans, and declaring profit. The emphasis here is imass (affordable) housng! It is the only way the FHA could upscale its delivery capacity.

By Tpl. Yacoob Abiodun, Planning Advocate, New York City, USA

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