Press Conference by the President ESV Johnbull O. Amayaevbo on Saturday 14th October, 2023
PRESS CONFERENCE BY THE PRESIDENT AND CHAIRMAN OF THE COUNCIL, NIGERIAN INSTITUTION OF ESTATE SURVEYORS AND VALUERS, ESV JOHNBULL OSARUMEN AMAYAEVBO, PNIVS, RSV PSLC ON SATURDAY 14TH OCTOBER, 2023 AT THE ROYAL CROWN EVENT CENTER,AHMADU BELLO WAY, KADUNA
Ladies and Gentlemen of the Press, on behalf of The Council of the Nigerian Institution of Estate Surveyors and Valuers and all our members, I wish to express our gratitude to you for consistently covering our events and activities. I also appreciate you for honouring our invitation today. We would continue to cherish our relationship and partnership.
We are having our Council meeting at this venue today, and in line with our tradition, I will address you on a number of national issues as related to our profession.
1. NIESV and the Current Administration
• As a leading professional body in the built industry and a critical stakeholder in the nation’s polity, NIESV would continue to support and collaborate with President Bola Tinubu’ led administration in its commitment to good governance and national economic development. The steps taken so far in that direction are highly commendable.
• We commend in particular the appointment of a professional in the person of ARC Ahmed Musa Dangiwa, FNIA to oversee the Ministry of Housing and Urban Development.
• Our Agenda for the Ministry which are purely in line with the interest and expectations of Nigerians are simple and highlighted under a broad heading; Housing Development and Delivery to Nigerians. You will agree with me that the role of housing to healthy living, security and social well being cannot be overstated.
• Real estate according to statistics contributes less than .10% to GDP. This is too ridiculous for a country bedeviled with housing shortages of about 21 million. In the United States of America and United Kingdom; housing contributes about 18%-20% to their GDPs. We can do better, far better.
• In any case, housing shortages provides opportunities for housing and real estate development. If properly harnessed and explored, real estate would replace crude oil as the economic engine of the country and take charge of driving economic growth. The industry would not only facilitate the building of the nation, it would as well create jobs, incomes for families and wealth for the nation. The potentials are there, waiting to be unlocked.
• There is urgent need therefore to address the housing challenge in the country and plan for future housing delivery. Concerted and pragmatic approaches are needed to make it happen. Nigerian Institution of Estate Surveyors and Valuers is willing to collaborate with government on this. We have completed an assessment of Land Titling Regulation across the states of the federation. We have shared with the Ministry, real estate practitioners, investors and stakeholders the document which we are persuaded will go a long way in facilitating titling, documentation and real estate development and which will assist developers and investors to understand the requirements and processes for obtaining land titles in the country.
• We call on the Federal Government to come up with policy thrusts that would enhance and accelerate housing delivery particularly to the less privileged within the shortest possible time. Such policies should be aimed at strengthening institutional structure and framework at all levels of government, land titling procedure, the mortgage system and must also incorporate the private sector and professional organisations in the built sector. Nigerian Institution of Estate Surveyors and Valuers is willing and ready to collaborate with the government the Ministry of Housing and Urban Development, which incidentally is our Supervising Ministry for the realization of these lofty goals.
• We also call on the Federal Government to as a matter of urgency set up a robust agenda for housing delivery that must put in place proper institutional framework cutting across all levels of government, Local, State and Federal, private sector driven mortgage system with full government support in terms of policy and regulatory functions, accelerated land titling program for all states of the federation that will release plots with value for the housing sector, provision of infrastructure and layouts for housing development, with special attention to the provision of social housing for the less privileged and vulnerable people in all the states of the nation. Housing and infrastructure development must be promptly addressed, with government partnering with the private sector and the professionals to draw housing programme and implement same to the letter. Time has come to focus on Social Housing.
• A major hindrance to housing development is the Land Use Act. The Act is overdue for comprehensive review. That is why the Nigerian Institution of Estate Surveyors and Valuers have been calling for a review of the Act, and this cannot easily be done until it is removed from the Constitution. In the interest of Nigeria and Nigerians, we urge you to lend your voice to the call for a review of the Land Use Act.
• NIESV will continue to spearhead strategic policy frameworks to drive the economy, housing provision, housing delivery and infrastructure development.
2. Unification of Foreign Exchange Rates on Real Estate in Nigeria
In a bold drive to revamp the nation’s economy and set the country on the path of stability, growth and prosperity, the administration of President Bola Tinubu has taken a number of decisions since its assumption of office in May.
One of the crucial decisions so far taking towards strengthening the economy is the unification of all segments of the foreign exchange market which collapses all windows into one. The decision was one of the series of changes to operations in the foreign exchange market aimed at improving liquidity and stability.
Central Bank of Nigeria's move to unify the exchange rates implies that all transactions will now be done through the Investors and Exporters (I&E) window, as against the segmentation of the market into different windows. Exchange rate will now be determined by market forces of demand and supply. The new policy is essentially a shift from a fixed exchange rate system to a floating exchange rate system, a “Willing Buyer, Willing Seller” model, and participants would transact at their preferred rates within the I&E window.
• The new exchange rate policy is expected to bring about greater liquidity and stability in the Nigerian FX Market, though the economy should expect, or most likely expect devaluation, and devaluation of the Naira would definitely have a number of effects, both positive and negative on the Real Estate Industry.
• In the past two decades, we have seen the entrance of international firms into the local market and which is a welcome development. Devaluation would enhance the influx of foreign investors and make real estate assets more affordable for them. They would take advantage of the opportunity, which is sure. This would increase investment in the real estate, and this would stimulate development, construction, market growth, job creation, employment and several other multiplier effects.
• With devaluation in place, real estate, Nigerian goods and services would be more competitively priced at the global arena. Nigerian real estate should expect increase demand from international buyers or investors, and this is good for our economy.
• What about Diaspora remittances? I trust Nigerians in Diaspora. They would take advantage of the devalued currency to invest in real estate properties back home. This would spur real estate investment and boost the performance of the economy.
• But it might not be an exciting story all through. Devaluation largely causes or contributes to inflation, particularly in a developing economy such as ours. That is the basic truth. And we know the implication of inflation on the cost of building materials, market growth, labour and cost of living.
• Once the cost of construction materials goes up, real estate development is automatically affected. We should not forget that large quantities of construction materials are imported, and with devaluation and inflation, the landing cost of the materials will go up, leading to increase in cost of construction. And since the investor must make profits whatever the case, cost of real estate delivery would go up. Meanwhile, purchasing power of individuals has already declined as a result of devaluation and inflation.
• This is the picture we should expect from unification of exchange rate. These are the effects of the new foreign exchange regime on the real estate industry, the good and the not too good side. Nigeria however has strong secular growth drivers in spite its weak and fragile economy. Its large and ever growing population, rapid urbanization, youthful and fairly educated population factors well placed her for strong long term growth.
• Real estate connects to the overall economy from a number of perspectives. Real estate reflects on the overall condition of the economy. Though a reflection of the economic activities, real estate can drive growth and job creation in the economy if harnessed with the right enabling environment by the different levels of governments, in partnership with the private sector and professionals in the built sector.
• We call on the government to vary its decisions to manage market dynamics and economic variables for effective management of the policy with the aim of mitigating the negative effects of the Forex market on real estate and housing provision.
3. Removal of Subsidy on Petroleum
We are deeply concerned about the state of the economy as it affects an average Nigerian. Cost of transportation, cooking gas, foodstuffs and other products, have skyrocketed, and beyond the reach of many as a result of removal of subsidy on petroleum products. The ripple effects of the government policy have placed a huge burden on Nigerians.
It would be recalled that President Bola Ahmed Tinubu upon assumption of office May 29, 2023 announced an end to the subsidy policy which began in the 1970s and which became institutionalized following the promulgation of the Price Control Act in 1977.
While many stakeholders insist that petrol subsidy is the last hope for an average Nigerian to have a share of the ‘’national cake’’, there is no doubt that fuel subsidy has adversely affected Nigeria’s finances and keeping it is fiscally inadvisable. Payment of subsidies has long been a tremendous drain on the resources of the country, and if Nigerians are truly desirous of sustainable infrastructure and economic development, subsidy should go.
And it has gone, though not without inflicting some hardships on Nigerians, particularly Nigerians at the receiving end, the unemployed, the employed urban poor population and those surviving on low incomes have had to pay high transport fares to get to work daily. Prices of goods and services have gone up, and rents would definitely respond accordingly. Meanwhile, inflation is biting with prices of goods and services skyrocketing.
Critical sectors of the economy, including the real estate are already feeling the impact. That removal of subsidy has adversely affected the industry and aggravates the already huge housing deficit is an under-statement. High cost of fuel has led to increase in transport fare, and has caused the cost of building materials prices to shoot up, simply because producers of these materials rely largely on petroleum for energy, meanwhile electricity supply is not yet stable. Cost of taking the materials to sites has also increase. These are having consequences on rent, affordability, housing delivery and house gap. Industry practitioners are already experiencing defaults in payment and renewal of rents for commercial and residential accommodation.
Going forward; there are huge benefits of subsidy removal to the economy. if sincerely implemented, the long term benefits are huge, and worth the pains and sacrifices of the moment.
Deregulation of the petroleum sector would give room for determination of prices by market forces, engender competition, attract private and direct foreign investment, increase efficiency, increase supply and ultimately lower production costs and prices. This would help to diversify the country’s energy mix, reduce dependence on fossil fuels, and mitigate the impact of fluctuating global oil prices on the economy.
In the interim however, government should introduce comprehensive incentives and palliatives to cushion the effects of deregulation on the poor and average Nigerians.
Housing and infrastructure development must be promptly addressed, with government partnering with the private sector and the professionals to draw housing programme and implement same to the letter. Time has come to focus on Social Housing.
As a long term measure, government should engender competition in the downstream sector of the petroleum industry to encourage more efficient and cost-effective distribution of petroleum products. Full deregulation of the petroleum sector, promotion of renewable energy, investment in refining capacity, strengthening anti-corruption measures are all requirements for sanitizing the industry and keeping fuel prices affordable for consumers.
4. NIESV Position
We commend government policies to reflate the economy and put it on a sound footing.
- Government should however redouble its efforts in addressing the harsh realities in the country. The country has vast opportunities, population and abundant natural/mineral resources to prosper. If we harness and deploy them properly, issues of inflation, rising cost of living, unemployment, high rate of poverty, widening income gaps, weak economic growth and other socio- economic challenges would drastically reduced.
- Introduction of Infrastructure Support Fund is a step in the right direction. In other economies, when you have challenges in the economy, government would simply invest massively in infrastructure. Provision of infrastructure spurs housing development and amplifies growth in the real estate sector. This would create jobs, and stimulate economic activities that would ensure that people have means of livelihood. When they have means of livelihood, they will be able to pay tax, which is also used to refinance the economy and you have multiplier effects, and individual businesses thrives on the back of that.
All hands must be on deck to rescue Nigeria from the not too good situation it presently is. We are all stakeholders in the Nigerian project.
Ladies and Gentlemen of the Press, I thank you for your presence and attention.
Long live the Federal Republic of Nigeria!
Long live Nigerian Institution of Estate Surveyors and Valuers
ESV Johnbull Amayaevbo PNIVS RSV pslc
President and Chairman of The Council