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How build, operate and transfer can reduce housing deficit

The housing sector of Nigeria has been experiencing a deficit since the civil war, albeit in the 1960s, and the lack of enthusiasm by subsequent governments to take responsibility for this anomaly has caused an increase in this situation nationwide; both in the rural and urban settlements which are either qualitative or quantitative respectively.

A housing estate in Nigeria

Housing deficit is not peculiar to Nigeria only, it can be found all over the world. However, the reasons for the shortage of housing units in Nigeria are of national concern. Looking at how long the government has tried to curb these issues one would be left to wonder whether the situation of housing deficit is a defeat-able one. Certain things prevalent in the Nigerian environment have increased the deficit of housing, and they include: insecurity, intertribal/inter-religious wars; harsh economic conditions; increase in population; and, migration into the urban areas.

A good look at the condition of the housing deficit in Nigeria will reveal that Nigeria needs decisive and intense actions that would involve more than just a single service provider in the sector of infrastructural development. Most experts in national development have found answers in the partnership agreement between a private firm and a public agency. Public-private partnership (PPP) is a form of agreement between public and private sector agencies, typically on a long-term basis.

As a developing nation, Nigeria has also keyed into the public-private partnership scheme in various sectors of national development including the housing sector.

The Build, Operate and Transfer (BOT) is a type of partnership where a private sector partner (such as an estate surveyor and valuer) builds a property according to specifications given to it by the owner of the property which could either be a public agency or an individual, operates the property by renting it out to tenants or short let users within the specified time (a period which he recoups his capital and makes a profit), and then transfers the property back to the owner at the end of the contract time.

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In this type of arrangement, the private sector partner is responsible for the bulk of the financial requirements for such a project; these finances are mostly sourced through bank loans or personal funds, more importantly, the risks are shared between both partners so as to maximise the value of services rendered.

Nigeria has a lot to gain from a partnership project which benefits both parties such as BOT, especially in areas where there have been obvious challenges such as is seen in the nation’s housing sector. BOT has the potential to reduce the housing deficit problems in Nigeria due to the not-too-complex structure of the partnership.

This article discusses how the BOT type of public-private partnership can be used as a tool for resolving the housing deficit problem in Nigeria.

Below are some of the ways in which BOT can reduce the housing deficit challenges in the country:

Increased Number of Housing Units

The situation of housing deficit in Nigeria has become a matter of urgency, which is why a PPP like BOT helps in making available housing units to the population through the efficient use of the massive human, technological and financial resources available to the private partnering firm. In BOT projects, there is a minimal situation of abandonment of projects unlike in projects executed by the public sector or a single individual, where there are hardly enough funds to carry out massive housing units projects that can cater for the population or a long process for the release of funds for projects, and continuous awarding of contracts to different firms without actually achieving the set goals.

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The Private Partner firm, which happens to be in charge of financing, building and the eventual operation of the housing units, understands that the project is both a form of investment and has an overall impact on the development of the housing sector and is able to cause an increase in the comfort of the population who happens to be the major focus of both parties involved.

Increased Standard of Housing Units

When considering the condition of the housing deficit, the standard of housing units is as important as the number of units. Due to constant monitoring by the Party granting concession and an understanding of the fact that the property is a long-term investment, there is a high standard in the quality of materials used and the type of properties built.

The Private Partner is aware of the fact that the project is a long term project, therefore the firm ensures to build quality housing units that would serve the needs of those that would acquire such housing units, also the quality of these housing units would ensure that the units can actually stand through the time allocated to the private firm for its running and even more after it has been transferred to the public sector.

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Convenient Lease/Sale Procedure

According to the document released by the government at the early stages of PPP in Nigeria (2002), the essence of bringing in the private sector is to ensure that the private sector plays an efficient role in supplying cost-effective housing units to the population. As opposed to the rigorous process involved in acquiring a property directly from the public sector, acquiring property from a private firm is less stressful and requires fewer procedures. This is because the Private Partner firm has already gotten all the necessary documents from the public sector which ensures the credibility of the property thereby increasing the interest of individuals that have a need for housing units.

Also, the involvement of the public sector/ individual ensures that the properties are at a subsidised rate thereby making it more affordable than it would have been if it was solely owned by the private firm.

From the above considerations of the positive impact of BOT on the housing sector of Nigeria, one would find that this type of partnership is able to handle the three most notorious reasons/causes of housing deficit, which are a low standard of housing units, shortage of housing units, and high cost of housing units.

This means that BOT is a healthy and effective way to handle the housing deficit problem in Nigeria if given proper consideration by the government, and a well laid down legislation towards land and housing.

By Ikenna Lansar Aghaji (Principal Partner, Lansar Aghaji & Co)

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