Editor’s note: Mutiu Iyanda, the ZENITHBLOG.com partner blogger, in this article explains why Nigeria’s poor could not affort decent houses and why code of base pyramid should be cracked by the country’s entrepreneurs.
His blogs are http://ift.tt/2iVtmAV, http://ift.tt/2iUENXl
He could also be contacted via: +2348141374490, +2348062544816
More details in ZENITHBLOG.com’s step-by-step guide for guest bloggers
According to NOI Polls’ 2014 National Survey, 31 percent of adult Nigerians live in their personal houses; built, bought or inherited. To fill up the deficit, the country needs a minimum of N56 trillion, according to the estimate.
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High costs of land and building materials have been identified as main impediments to the construction of housing units in the country. Recent estimates showed that Nigeria needs 17 million plots of land to meet her 17 million housing shortfall.
Converting this into a unit of measurement, square kilometre, it would amount to approximately 11,470 square kilometres, roughly the size of Rivers state, or three times the size of Lagos state. As Nigeria working towards her goal of becoming one of the top 20 developed economies in the world by 2020, adequate shelter is one of the essential needs Nigerians are agitating for.
Since income status plays a very significant role in the determination of home ownership in modern economies, Nigerians usually realised their housing dreams through the purchase of completed house of different categories or built by themselves. Each method has merits and demerits.
By choosing built-it-by myself method, Nigerians have opportunity of constructing their houses to their taste, spend less and monitor the whole process of construction while it is time-consuming and stressful. For those who are busy to supervise their houses, a ready-to-live-home method is mainly adopted.
For the people at the bottom of the pyramid having such opportunity is almost negligible. There is a lot of daunting statistics about the BOP’s people when it comes to the realization of housing needs. Un-habitat estimates that close to 1 billion individuals around the world live in slums and other inadequate housing, with projections expected to triple by 2050 if the problem remains unaddressed.
Surprisingly, most of the slums are found in urban areas across the world. According to World Development Indicators Database, between 60% and 80%, Nigerians in urban areas do not have access to adequate housing in 2015. The country’s national body for statistics, National Bureau of Statistics, has earlier discovered that most Nigerians live in houses with no toilet provision, covered pit Latrine, and uncovered Latrine.
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In the west, east, south and north regions of the country, people at the bottom of the pyramid are experiencing overcrowding, indoor air pollution, poor wastewater treatment and lack of sewage and sanitation facilities increase the chances of contracting acute respiratory illnesses, which in turn hampers income and social mobility.
Existing information shows that Lagos state has a large number of slum areas in the western region. These include Agege, Ajegunle, Amukoko, Badia, Bariga, Bodija, Ijeshatedo/Itire, Ilaje, Iwaya, Makoko, Mushin, Oke-Offa Babasale and Somolu. In the eastern and northern parts, Edim Otop, Abakpa-Nike, Mushin, Inyanya Labour Camp and Jos also possess slums.
Giving the people at the BOP affordable housing
Our review of various definitions to gain a deeper understanding of affordable housing shows that the concept remains undefined. This is hinged on the fact that different experts and countries have varied indexes for measuring affordable housing. In other words, what defines an affordable housing in Canada is not really applicable in the United States of America likewise in Nigeria.
However, income is used most often to define affordability. There is no doubt that the current market in Nigeria is structured to deliver housing that is too expensive for the people at the bottom of the pyramid. Hence, there is a need to crack the financing code for them (BOP people) to become homeowners.
Existing businesses that are trying to break the base are still not making houses available and affordable, not considering purchasing power parity and other variables. Investigation shows that a household with more than four people at the base needs $10, 953 to
Since affordable housing is measured on the budget of lower income earners, especially BOP’s people, the high cost could be nipped in the bud through blue ocean strategy by creating and raising certain variables and reducing and eliminating those capable of thwarting low income earners’ owning a house dream.
Our analysis based on the purchasing power parity of Nigerians at the bottom of the pyramid using World Bank’s projection, National Bureau of Statistics’ recent population estimates and affordable housing modelling. The study shows that low-income earners (at the BOP) could only afford a house of N1, 389,228, averagely.
How large is the market?
The measured BOP market for housing in three regions for 2017 is N309.2 trillion. This comprises southwest, northwest, and northeast. This is expected to reach N381.7 trillion by 2020. In 2017, the northwest market is the biggest with over N118 trillion followed by the north-east with more than N115 trillion while southwest had the least (N103.9 trillion).
Our analysis for 2020 also indicates that northwest and north-east markets are huge more than Southwest’s market (N123.5trillion). The northwest market is expected to be N148.7 trillion while north-east would be N144, 1 trillion. Our projection increase is based on the percentage of people living at the pyramid in the northwest (77.7%), north-east (76.3%) and southwest (59.1%), according to the National Bureau of Statistics. The Annual Growth Rate for the north-west region is 7.8% while north-east and southwest are expected to grow by 7.6% and 6.0% respectively.
Cracking the base
Opportunities in this market are substantial. Private companies and entrepreneurs with right innovative ideas to enter the market could venture into materials manufacturing to retail, distribution, slum upgrading and developing into affordable houses, and financing.
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The blue ocean housing market grid
It is a tool that challenges house builders or real estate developers to think about which acts and activities they should do less of because they isolated low-income people (BOP people) from becoming homeowners, and which they (house builders/real estate developers) should do more because they make people at the BOP proud homeowners.
Mutiu is a research and communications professional.
He has a special interest in qualitative and quantitative methods of finding solutions to social and communication issues.
He currently works with Enterprations Limited, a management consulting company, which also provides a platform for working class professionals and aspiring entrepreneurs to own their business.
Enterprations offers strategic tools such as business plan, growth plan and turnaround plan among others for established and aspiring businesses.
Mutiu Iyanda
The views expressed in this article are the author’s own and do not necessarily represent the editorial policy of ZENITHBLOG.com.
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