NationalMirror Mixed feelings trail China’s proposed $6bn housing sector loan DAYO AYEYEMI June 11, 2013 Caution should be the rule of the game following a business proposal by the China Export and Credit Insurance Corporation, SINOSURE, and the International Commercial Bank of China (ICBC), to invest $6 billion, about N948 billion, in Nigeria’s housing sector, according to housing experts, who have advised the authorities in charge to read between the lines before the deal is sealed. DAYO AYEYEMI, writes. Different stokes for different folks. Although the Federal Mortgage Bank of Nigeria (FMBN), is still basking in the ecstasy of the Chinese’s proposal to invest $6 billion, about N948 billion, in the nation’s housing sector, practitioners in the industry which include estate developers, builders, engineers and estate surveyors, are expressing mixed feelings concerning the offer. While a few of them see the offer as a good step to move the industry forward, many urged the Federal Government to be vigilant before sealing the deal so that it does not turn a Greek gift. Nigeria has about a housing deficit of about 17 million units and will need to build about one million houses every year in the next 20 years to bridge the gap. It will also require about N48 trillion to meet the need. The Managing Director of FMBN, Mallam Gimba Yau’ Kumo, had disclosed penultimate week at a Media Round- Table in Abuja organised by the Nigerian Union of Journalists (NUJ) that a China Export and Credit Insurance Corporation, SINOSURE, and the International Commercial Bank of China (ICBC) were in Nigeria with a business proposal to invest in the nation’s housing sector. Yau’ Kumo further disclosed that the investment tour was part of the bank’s business expansion initiative targeted at attracting foreign investment into the capital intensive sector such as housing with a view to fostering the conditions of public private partnership (PPP) in the development of the sector He hinted that FMBN has entered into discussions with the two Chinese investment companies with a view to securing what he called a single-digit loan facility of $6 billion to develop the housing sector. The loan, he said would be in a moratorium of 15 to 20 years; which would be released directly to Chinese construction companies in the country to be disbursed in tranches of $1.5 billion, the arrangement being that the firms would build the houses under the supervision of the FMBN. This looks good on the investment score-card of the Federal Government. But the matter is not as simple as that as developers and other built environment experts have continued to warn the central authority on the long term negative implications of the deal if signed without putting in place the necessary framework to promote economic development. When contacted by National Mirror, promoters of Medical Guild Estate, Warewa, Ogun State, Mr. Adams Kehinde, said the conditions that the money would be deployed through FMBN to Chinese firms to build houses for Nigerians should not be accepted. According to him, the Chinese cannot make sole decision to build the houses alone, pointing out that if allowed, it would promote capital flight, which would have negative consequences on Nigeria’s economy. Kehinde explained that the government has a role to play in the matter by studying the proposal documents very well and ensure that a framework is put in place to ensure that the money is disbursed through the FMBN by taking into consideration the Real Estate Developers’ of Nigeria (REDAN). He said, “Our government should look beyond economic growth but economic development. As we know, the Chinese will import all their labour, materials and machinery. They will also transfer their money to their home country. This will affect our economy, and this is why our government needs to study the document very well to guide against capital flight.” Part of what to consider in the proposal, according to him, should involve prices of the housing units, noting that the income of majority of Nigerians is low and most cannot really afford N10 million housing unit. “Many people are not employed. Those that are employed are not being paid well. Also, there is job insecurity. All these must be factored into the arrangement,” he said, canvassing that local developers should be involved to partner FMBN and the Chinese firms to deploy the fund appropriately. A home seeker, Mr. Bello Adama, who is also a plank seller at Ikeja, Lagos said government should hasten the process of accepting the offer since it would provide opportunity for him and people in low income group. He urged that any house built and the price is above N1.5million and N2million may not be affordable for people in his cadre considering their low income. Also speaking, Managing Director of Xpress Property Limited, Mr. Segun Allan Ali, while expressing mixed reactions, advised government to look more at the positivity of the offer with a progressive vision. He enjoined the Federal Government to take a critical look at the pros and cons of the proposal and take a slice of the healthy part of the apple. He added the central authority to study the proposal and negotiate conditions that will suit the nation’s obvious needs in the housing sector “after all it is a low interest loan offer and a practical investment that will serve the social need of our people.” According to Ali, who is also a developer, the proposal should be shared with relevant stakeholders in the sector for an open minded input. He, however, described the proposal “a step in the right direction,” noting that some other African countries are currently benefiting from similar largesse of the Chinese investors. Accepting the offer, he said would depend of the details contained in the proposal and the alternative options available to Nigeria considering the dire need for a vigorous and proactive remedy to the dismal lack of affordable housing in country. He said, “A progressive offer is better than no offer at all. The housing situation in the country has an obvious void which the Chinese people have identified and thus quick to take advantage after all they are not obliged to take on the social responsibility and obligation of our government. “Although I am not privy to the fine details contained in the proposal, it may also be a wakeup call to our local banks and financial institutions to see the moral need of offering sensible services in the sector in the area of funding.” He maintained that the implication would be a positive address to nation’s social need of affordable housing if the terms and details of the proposal are protective of the national interest and in accordance with the standard of the nation’s building codes. “I really can’t see any negativity in this offer because we have a need and the Chinese are offering to give,” he said. On the fear the proposal might flush out indigenous firms, Ali said it would not but help to further activate the docile local firms, explaining that Chinese firms would need to collaborate with the locals to effectively deliver the housing units. He said, “This can also be entrenched in the negotiation and implementation of the proposal or MOU as the case may be.” Former, Chairman, Nigerian Society of Engineers (NSE), Lagos Broach, Mr. Olatunde Jayesimi, also sounded a warning to the FMBN, urging that the facility should be taken with caution. He warned that the proposal should be studied to make sure that the interest of the country is not negotiated. Jaiyesimi, who is also a builder, advised that local firms’ interest should be properly protected. He said, “l must sound a note of caution here. Some years ago, the Lagos State Government brought some Chinese companies to construct classroom blocks (Millennium Classroom). The companies brought in artisans under the guise of experts. You know labour is cheap in China. It is easy for the companies to bring in all sorts of personnel under the guise of expatriates. “This should not be allowed to the detriment of our local firms. Our local professionals and technical men and women should be involved in the proposal bearing in mind that China products are in some cases associated with poor standards and quality, care must be taken to ensure that construction materials to be used must be able to stand the test of time. Houses to be built must be affordable and of simple design for ease of maintenance.” He enjoined government to involve of Nigerian housing experts in the deal, saying, “local professionals are capable and can perform if given the opportunity”. The newly-elected Chairman of Lagos Branch of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Stephen Jagun, said there was need to apply caution before accepting the offer. He said “It is good that China is dangling the carrot. We must however read between the lines. We must be cautious that China is trying to match America’s influence the world over; particularly in Africa. “We must put uncompromised standards in place to ensure that we don’t become a dumping ground for sub-standard goods. The same China that sends inferior goods to Nigeria sends good quality ones to England because there standard will not be compromised.” According to him, the negotiating team must ensure that self interest and political consideration do not determine the location of the projects. He advised that the nation should define what it wants done and it wants it. “China in giving out loan wants to also promote its companies. We can find a way around how we can have local content in the delivery; employment of our professionals and establishment of industries locally among others. Former Vice Chairman, Lagos branch of NIESV, Mr. Ibukun Jolayemi, expressed mixed feelings, saying the positive implication of the offer if accepted, would add to the supply of housing in the country. “The government and private sector cannot meet the demand for housing and the interference of foreigners is giving us additional solution to meet the need,” he expressed. The negative implication, he said would mean that Nigerians are going to buy the houses, and the money realised from the sale by the Chinese will be transferred to their country. According to him, unless government make a legislation not to allow full repatriation of the money by encouraging them to reinvest in the country, the proposal would not engender economic development. Besides, Jolayemi said the offer would give room for competition between local developers and their foreign counterparts, which will lead to improved housing quality, thereby reducing the cases of collapse building.
Posted on: Tue, 11 Jun 2013 07:08:55 +0000
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