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close this book National trends in housing-production practices
close this folder 1. Changing shelter policies in Nigeria
View the document A. Changing objectives in the shelter sector
View the document B. The current shelter policy and its links with the overall economy
View the document C. Objectives of the National Housing Policy
View the document D. Legal and regulatory framework for shelter delivery
View the document E. Mobilization and allocation of financial resources
View the document F. Shelter production and improvement
View the document G. Scope and scale of the shelter problem

1. Changing shelter policies in Nigeria

Housing represents one of the most basic human needs and has a profound impact on the health, welfare, social attitudes and economic productivity of the individual. It is also one of the best indications of a person's standard of living and of his or her place in society. Despite this essential role played by housing as a basic need, an adequate supply of this commodity has been lacking in virtually all societies throughout history.

The situation is particularly serious in the developing countries where population growth and urbanization are increasing very rapidly and where the gap between housing need and supply is greatest. This condition remains because housing has typically been regarded as an unwanted stepchild, a frustrating nuisance in the family of projects that constitutes development or economic programmes. Paradoxically, past theories of economic development regarded housing as a non-productive, durable consumption good or service with an extremely high capital output ratio. Nigeria belongs to the category of countries where the above conditions prevail.

The subject of housing has generated much discussion and interest in Nigeria in the last two decades. This has given rise to calls on the various levels of government to give greater priority to the inherent housing problems and to allocate a reasonable percentage of their annual budget to housing.

Unfortunately, the provision of housing has been generally viewed by policy-makers in Nigeria as something to be tolerated rather than desired. This attitude has resulted in giving housing a low priority rating (until recently) in development planning. For example, specific output targets have always been set for agriculture, manufacturing industries, roads, water etc., but housing has been treated as a "social overhead."

Relatively little continues to be done in improving housing supply in comparison with overall needs. Therefore, housing remains one of Nigeria's most intractable problems; one which is continually getting worse as the rapid population growth and consequent urbanization goes on unabated in spite of the seemingly huge assets allocated to this sector. In fact, it may well be seen as the great Nigerian failure of the last two or three decades. In order to achieve the national objectives of the shelter strategy it should be linked to the overall settlements policies, since shelter is an integral part of settlements development.

The basic relationship of land to housing is at times not obvious. A house is fixed to land and involves a package of related goods and services. The house is helpless in escaping development shifts and changing environmental conditions as land uses are not readily interchanged. Housing is more than shelter, it encompasses all the ancillary services and community facilities which are necessary to human well-being. These include the land, utilities and services (infrastructure), access to employment and social amenities as well as the structure or shelter itself.

The relationship between the provision of housing and adoption of urban or city planning measures as a prerequisite to that provision is very fuzzy and sometimes utterly unclear in Nigeria, even among practicing professionals in related fields. Urban planning as an integral component of the housing-delivery system has consisted of a framework of rules, presented as being neutral, and legitimized on the grounds of being in the public interest. However, within the urbanized areas of Nigeria characterized by extreme social and economic inequalities, it is not difficult to show that the neutrality is a myth. Invariably, its impact on different sections of the population is far from equal - an example of the "social injustice within the city". But evidence of this does not in itself help in identifying the means by which that situation could be transformed.



A. Changing objectives in the shelter sector

A casual review of past housing policies and programmes of both the public and private sectors in Nigeria reveals that effective solutions to housing problems are yet to be found. The varied approaches made by the successive Nigerian Governments towards solving the housing problems have depended mainly upon the specific situation encountered, the resources they could command and the general attitude towards housing.

Because of the above, Governments in Nigeria have maintained that housing should be an integral part of economic development plans, while encouraging the private sector to be the main source of investment in housing. ID this way, as earlier said, housing production and delivery has been an important part of national development planning classified under the major heading "social sector" It has always been assumed that the housing situation in Nigeria would improve as general economic conditions improved, especially in the major urban centres. Yet, based on this "wait and see" attitude there have been more failures than successes. In Nigeria most individuals aspire for the day when they will own their houses. The aim of private house developers is not necessarily to live in them as owner-occupiers, but to rent them out at exorbitant prices to recoup their investments as soon as possible. Thus, house-owners in the cities are not interested in providing the needed facilities, and do not care if there is access to their houses or not.

The shelter history of Nigeria reflects four public-sector policy periods (FRN, 1985; Onibokun (ed.), 1985; I RN, 1990), which are outlined in the sections below.

1. Colonial period

During the early colonial period, the housing activities and policies of the Government in Nigeria focused on the provision of quarters for expatriate staff and for selected indigenous staff in some specialized occupations like railways, police, education etc. This period saw the establishment of Government Reservation Areas (GRAB) as well as a few African Quarters and has been aptly described as the era of "housing reservations. ~ No efforts were made by government to build houses either for sale or rent to the general public and little was done to order the growth of settlements outside the GRA. At this period, public housing development was restricted to Lagos and the regional provincial headquarters.

One housing scheme that was introduced to benefit Nigerians during this era was the African Staff Housing Scheme (which became operational in 1956). It was, however, just a token effort. Under this Scheme, qualified indigenous senior civil servants could be granted housing loans of up to five times their annual salary. The conditions or resources for funding the Scheme were not substantial and only a few officers benefited from it.

Pursuant to the Town Planning Ordinance (Cap.95), the Lagos Executive Development Board (LEDB) was created in 1928 and charged with the effective planning and development of Lagos. The creation was as a result of the bubonic plague which ravaged Lagos in the early 1920s. After 1954, and with the approval of the Lagos Central Planning Scheme, the LEDB for the first time attempted to solve the problems of public housing in Lagos. In implementing its schemes, the LEDB encountered a number of problems, one of which was that not much was achieved in regard to satisfying the housing need and demand of the inhabitants of Lagos.

Among other strategies and measures taken by the Government during the colonial period was the establishment of the Nigerian Building Society (NBS). It was set up in 1956 to provide mortgage loans and to (partially) satisfy Nigeria's housing needs. One of the functions of this Society was to encourage Nigerians to save, particularly for housing investment. The savings scheme witnessed poor response by the public. The demand for mortgage loans was heavy while the resources of the Society were sufficient to meet only a very small proportion of the demands. The loans favoured only upperand middle-class people; low-income earners did not benefit from NBS operations.

2. Post-independence period (1960-1979)

During this era, especially the period immediately after independence, emphasis was placed on the five-yearly Development Plans as an instrument for economic growth. In the first two plans, the housing sector was virtually neglected. Further deterioration was witnessed in the housing situation during the civil war period, especially in the war-affected areas. In 1967, more housing corporations were established in the newly created states. However, their contributions were rather insignificant. In other words, the scope of their operations were severely restricted due to lack of finance and technical personnel. Hence, these institutions served the upper-income earners only, as only relatively expensive housing estates were developed and loans were rather restricted.


Table 1. Exchange rate US$ - Naira






0 80

1982-1985 (average)


1986- 1988


April 1992 after deregulation)


January 1993


April 1993 (official)


April 1993 ("parallel" marker)


1 May 1993 ("parallel" market)


Source: Achunine, 1993.

The Third National Development Plan period (1975-1980) introduced the most comprehensive and active intervention by the Government in the housing sector. The plan clearly recognized the housing problems and aimed to increase the supply of housing to a substantial level. The Federal Government decided to participate directly in the provision of housing, rather than leaving it principally to the private sector. A total of N2.6 billion (US $3 billion) was earmarked for the implementation of the various projects during the Fourth National Development Plan period. This represented about 5.6 per cent of the planned total expenditure in all sectors.

3. Second civilian (Shagari) administration period (1980-1983)

The first two periods and especially this third housing period, witnessed a steady increase in the interest and involvement of the public sector in shelter delivery, and the awareness of the importance of the shelter sector within the overall economy. Although some of the shelter strategies and activities during these periods may be seen to be in conformity with the enabling concept, the direct production of shelter by the public sector remained their common feature. This strategy, which is contrary to the enabling approach, witnessed huge failures during the Shagari administration, when the Federal Government of Nigeria allocated N 1.9 billion for housing construction, in all the 20 states of Nigeria, including Abuja. By June 1983, N600 million (37.5 per cent) had been spent to complete only 32,000 units, yielding an overall achievement level of just 20 per cent (FRN, 1990: 3).

This period coincides approximately with the Fourth National Development Plan period (see table 2). It witnessed the continued increasing deficit on urban housing as well as its continuous deterioration in the rural areas. The beneficiaries of this programme were identified as the low-income earners whose annual income did not exceed N8000. A total of 40,000 units (of which 90 per cent were to be one-bedroomed, 10 per cent three-bedroomed) were to be constructed annually throughout the country. In this way, 2000 units were to the built in each state including the Federal Capital Territory (FCT), Abuja. In the states, these housing units were located in their capitals and local government headquarters. This effort was implemented by the then Federal Ministry of Housing and Environment. Mid-way through the implementation, a second phase of the programme was commenced, comprising 20,000 units of two-bedroomed core houses for the low-income groups. It is pertinent to mention that this phase of the programme failed to take off in most states, and that the shelter policy, came to an abrupt end in December 1983, making way for a fresh look at the shelter sector which has culminated in the new National Housing Policy.

Table 2. Planned federal expenditure on housing programmes during the 4th national development plan (1980-1985)



Estimated total cost (million N)

Federal housing units

Providing 2000 housing units per state


Development of sites-and-services

Providing 5000 plots of serviced land per state


Staff Housing Scheme

Granting housing loans to civil servants (N 40,000 per person)


Federal Government quarters in states

Construction of suitable quarters


Industrial complex layouts

Provision of plans and infrastructure at industrial sites


Construction of housing units

Development of 143,000 housing units per state in 19 states


Mortgage operation

Expansion of mortgage services, with emphasis on medium- and low-income groups





Source: Onibokun (Ed.), 1985.

4. Second military interregnum (1984-19931

It is perhaps somewhat premature to undertake an evaluation of the policy strategy and performance of this period because the period so far has been very much a transitional one in which the Federal Government has been preoccupied with the preparation of a new and more relevant National Housing Policy. This policy was finalized and launched by the President in February 1991. The policy has since become operational as the detailed modalities for its implementation have been put in place.

Though there is not much to say by way of the experience derived from its implementation within the short span of its existence, there is no doubt that under the present administration, remarkable achievements have been made in the area of housing and the improvement of the quality of our environment.'



B. The current shelter policy and its links with the overall economy

As stated above, the current shelter policy of Nigeria can only be described as emergent. Following the launching of the new National Housing Policy, the unfolding scenario in the housing sector economy is a clear testimony that with dedication and seriousness of purpose, the citizens can collectively and gradually ameliorate the housing crisis plaguing Nigeria. A meaningful discussion of the current policy must, therefore, at the same time deal with the immediate past policy and its emergent successor, the National Housing Policy.

The Third National Development Plan was like a watershed, in the history of policy development in relation to shelter in Nigeria. In that plan it was possible to go beyond the basic human need concept of Shelter to one in which it contributes productively; "shelter" represents one of the most basic human needs and has no doubt a profound impact on the ... productivity of the individual" (FRN, 1975: 1:307). Shelter was transferred from the social (consumer) sector of the economy to the regional development sector which was acknowledged to have a greater impact upon development than mere consumption. The priority accorded to the sector and the level of projected public-sector involvement rose dramatically.

1. The data contained in this report were collected before the military coup in 1993.

Post-independence development plans have given little emphasis to Housing having been lumped ... with town and country planning which itself has hitherto been regarded as a low priority sector. The government now accepts it as part of its ... responsibility to participate actively in the provision of housing ... and will therefore intervene on the large scale in this sector ..." (FRN, 1975: 1 :308).

By far the largest and most conspicuous component of the programme was the National Low Cost Housing Programme which required the direct construction of 200,000 low-cost housing units by government, making use of the services of contractors. The lapses and failures noticed during this period were significant in forcing the search for a new National Housing Policy.

Although the plan recognized a number of other measures and instruments for the achievement of its stated shelter objectives - increased investment in the domestic production of building materials, importation of building materials to supplement local input etc. - its basic strategy was clearly the direct production of the set production targets of the plan period. The Federal Government undertook a major reform of the land-tenure system, expanded the financial base of its mortgage agency, and of the institutional base of its mortgage agency, as well as that of the institutional framework for the public sector in the production of shelter. The issue of rent control as a mechanism for increasing access to shelter - though of some concern to government during this plan period - did not make any significant impact.

The improved perception of the shelter sector by the Government during the Third Plan period notwithstanding, little overall emphasis was placed on the vital role of the private sector in shelter production or the mass mobilization of human and material resources and participation in support of shelter output.

The Fourth National Development Plan period (1980-1985) also accepted the recognition accorded to the shelter sector during the Third Plan period. The basic policy of the Government - of massive intervention in the sector to provide large quantities of housing units with special emphasis on the low-income group - remained unaltered and was reinforced. The fourth plan came to an abrupt end in 1983 when the civilian administration was overthrown in a military coup d'etat. In 1985, the Federal Government, conscious of the inability of previous policies and programmes to deal satisfactorily with the mounting shelter problems of the country, set up a special committee, made up of representatives of relevant public-sector bodies and other non-governmental interests in the shelter sector, to analyse the past national policies and programmes and make proposals for a new national housing policy. The report of the panel formed the basis of the present National Housing Policy, which has a definite and far-reaching enabling orientation.



C. Objectives of the National Housing Policy

The ultimate goal of the National Housing Policy is to ensure that all Nigerians own or have access to decent housing accommodation at affordable cost by the year 2000.

In order to achieve this laudable goal, the Government decided to pursue the following policy objectives:

• Encourage and promote active participation in housing delivery by all tiers of government;

• Strengthen institutions within the system to render their operations more responsive to demand;

• Emphasise housing investments which satisfy basic needs;

• Encourage greater participation by the private sector in housing delivery.

The above objectives, among others, constitute the cardinal points for the implementation of the housing policy.

To accomplish the objectives, the following strategies have been put in place (FRN, 1991 10-12):

• Establishment of an appropriate institutional framework to facilitate effective planning in housing supply;

• Restructuring all existing public institutions involved in housing delivery at the federal and state government levels with a view to making them more effective and responsive to the needs of all Nigerians;

• Reviving existing laws and regulations, such as the Land Use Decree, the planning laws etc., in order to facilitate housing provision;

• Improving the finances and strengthening the executive capacity of local governments to enable them to contribute more effectively in housing delivery;

• Mobilizing private-sector participation in the provision of housing;

• Producing adequate cadastral and topographical maps to facilitate landuse planning and land administration;

• Producing and updating regional development plans and urban and rural master plans;

• Upgrading and rehabilitating low-quality or sub-standard houses in urban areas as a step towards improving the quality of the environment;

• Providing sites and services to facilitate home-ownership and orderly urban and rural development;

• Improving the quality and quantity of rural housing and infrastructure in order to enhance the quality of rural environment;

• Restructuring the Federal Mortgage Bank of Nigeria to serve as an apex housing-finance institution;

• Mobilizing savings through the establishment of a National Housing Fund (NHF);

• Ensuring a continual flow of adequate funds from various sources into the apex institution for on-lending to other mortgage institutions;

• Encouraging research into and promoting the use of locally-produced building materials as a means of reducing housing costs;

• Adoption of functional design standards to reduce costs and enhance socio-cultural acceptability, safety and security and privacy;

• Increasing the number and improving the quality of labour and other personnel needed in the housing sector;

• Utilizing the location of housing estates and other residential neighbourhoods as an instrument for a balanced population distribution in order to minimize associated problems of transport and services;

• Ensuring the preparation of a National Housing Plan to spell out the details and strategies for achieving the objectives of the Housing Policy.

1. Organization for shelter delivery

So as to achieve effective implementation, shelter strategies will need to be introduced at the national level by the Federal Government and further developed by the different governmental agencies, local authorities, the private sector, non-governmental organizations and community-based organizations (CBOs).

A recent significant development in Nigeria within the institutional framework is the clearer definition of the functions of, and assignment of roles to, the main public-sector actors in the shelter sector, as well as their interrelationships. Thus, the institutional framework forms the basis of the entire housing-delivery system and as such greatly influences the success of housing supply. A major factor in which the fundamental relationship between the various actors in housing delivery can be achieved is the flexibility to adjust to dynamic socio-economic and political changes, without unnecessary disruption to the system. Hence it is very desirable to centralize policy and programme control while decentralizing the activities.

The functions and roles of the various actors are specified in the new national housing policy and some of them are briefly summarized below.

2. Federal government agencies

The Federal Government is to initiate, define and coordinate the policy options and instruments for achieving the objectives in the housing sector while the actual implantation is to be undertaken by appropriate agencies at federal-, state-and local government levels. Basically, the Federal Government is to formulate policy, and coordinate, construct and monitor housing programmes and projects. The specific roles and functions of some relevant federal agencies are outlined below:

• The Federal Ministry of Works and Housing (FMW&H) is to formulate national policy on housing; articulate, coordinate and monitor housing programmes; promulgate relevant laws and regulations for the shelter sector; and generally facilitate the attainment of national shelter objectives.

• The Federal Housing Authority (FHA) was set up in 1973 to perform three principal functions, i.e., prepare proposals for national housing programmes for submission from time to time to the Federal Government; develop and manage real estates on a commercial and profitable basis throughout the Federal Republic of Nigeria; and provide sites-and-services facilities for all income groups, with special emphasis on the low-income group in the major cities.

• The Federal Mortgage Bank of Nigeria (FMBN) was - until quite recently - the sole specialized mortgage institution in Nigeria, undertaking both wholesale and retail mortgage transactions. Under the current National Housing Policy, the FMBN is assigned to play the central banking role in the mortgage-banking system. It will engage in wholesome transactions, and control the activities of the primary mortgage institutions.

3. State governments

Each state government in Nigeria is to formulate its own housing policy and execute housing programmes in line with the overall national policy. Specifically state governments are to, among other activities, perform the following functions:

• Establish appropriate agencies for shelter delivery;

• Promote the formation of housing cooperatives;

• Establish building societies and similar mortgage institutions;

• Prepare regional and settlement master plans;

• Ensure that local governments play more active roles in shelter matters;

• Promote and facilitate the development of sites-and-services schemes;

• Play an active role in the identification, production and use of building materials from local resources in order to ensure availability of cheap building materials for housing construction.

4. Local governments

In the past, local governments were not active in shelter production and delivery. Yet, it is their function under the new policy to:

• Assist in the formation of housing cooperatives;

• Determine the housing needs of the rural population;

• Provide residential layouts for low-income housing within their areas of jurisdiction;

• Provide and maintain infrastructural services to shelter;

• Be responsible for environmental sanitation;

• Upgrade and rehabilitate dilapidated houses in collaboration with the state governments.

Most of the changes and functions specified for the public-sector agencies in the new institutional framework for shelter are promotional in nature. The private sector is saddled with the greater responsibility of providing residential accommodation for the majority.

5. Private-sector participation

The formal and informal private sectors have provided over 90 per cent of the housing stock in Nigeria. In view of the past and current contribution of the private sector - and in order to increase the national housing stock substantially - this sector needs to be mobilized, organized and motivated in line with the overall organizational structure of the shelter-delivery system. For this purpose, the private sector is defined to include all financial intermediaries (both banking and nonbanking); industrial and manufacturing organizations and large commercial houses. It also includes purely private and individual investors.

The main participants and programmes in the private sector are the employees' housing schemes and the insurance companies. The employees' housing schemes were established by the Special Provisions Decree No.54 of 1979 (as amended). Under this scheme staff housing estates have been developed by United African Company of Nigeria, Union Bank of Nigeria, Elf Oil Company, Shell Oil Company, Mobil Oil etc. These schemes have been operating to an appreciable degree of success within the following stipulations:

• Every designated employer (whether corporate or unincorporated) is to submit proposals for consideration for the establishment of a housing scheme for its employees;

• Three quarters of the units so provided are to be reserved for employees who are not executive or senior staff;

• The provision of the housing scheme includes provision, on a rental basis, of separate buildings or block of flats

• The scheme is mandatory for all employers who have not less than 500 persons in their employment in any part of any state of the Federation or any part thereof.

Another arm of the private sector that has contributed to residential housing development consists of the insurance companies. This has been a result of the Decree No.59 of 1979 which made it mandatory that all insurance companies invest not more than 25 per cent of their life funds and not more than 10 per cent of its non-life funds in real estate. The provisions have since been amended by Decree No.3 (National Housing Fund Decree 1992) which states, inter alia, that, every registered insurance company shall invest a minimum of 20 per cent of its non-life funds and 40 per cent of its life funds in real property development of which not less than 50 per cent shall be paid into the fund through the FMBN. This has led to a lot of protests and the insurance community has requested further amendment of the provisions.


D. Legal and regulatory framework for shelter delivery

The existing basic legal and regulatory instruments on shelter in Nigeria include:

• The Land Use Decree of 1978;

• The Nigerian Town and Country Planning Ordinance No.4 of 1946 (Cap 155 of the Laws of Nigeria);

• Building regulations and bye-laws of the various previous Governments.

It is widely recognized that the above legal instruments are either obsolete and unrelated to the realities of the present-day shelter situation in Nigeria, or deficient in some significant respect.

The Land Use Decree, which is a major land-reform instrument, remains a controversial law. Nevertheless, the law is so basic to the livelihood of the majority of people that it has received unusual government protection since 1979. One point, on which both defenders and opponents of the law agree, is that the machinery of land management and administration built into the law is very cumbersome and at times counterproductive.

For this reason it does not release land speedily and adequately enough to satisfy the basic land needs of the economy, especially for housing construction. Furthermore, its cumbersome procedures are intimidating for the poor and illiterate, to whom formal access to land is very difficult. To this extent, the law has a discriminatory effect, favouring the middle and upper segments of society against the poor and underprivileged (FMW&H, 1985; Onibokun (ed.), 1985; Odimuko, 1990). Currently, efforts by Government in reviewing the decree to make it more functional as a machinery for land delivery are nearing completion through the Law Reform Commission.

One example of a law that is thoroughly obsolete is the Nigerian Town and Country Planning Ordinance 1946, (Cap. 155 of the Laws of Nigeria). As the basic regulatory planning mechanism, it is vital in the shelter sector because it controls the major part of the process of translating raw land into shelter and a living environment. The main criticisms of this law are that it does not offer sufficient participation by the relevant actors, it does not reflect modern land- use planning concepts, uses and practice, and it has not been synchronized with the provisions of the Land Use Decree of 1978. This necessitated the setting-up of a National Committee for its review. The final draft of a new Nigerian Town and Country Planning Law has since been submitted to the Government and it is hoped that it will soon be promulgated to assist in the implementation of the new National Housing Policy.

As regards the enforcement of building regulations and bye-laws, the practice over the years has been for local governments, planning and development authorities to adopt these instruments for local use. A common feature of these byelaws is the very strong similarity between them and the eighteenth century building codes and standards introduced by the early colonial administrations. These building standards do not reflect contemporary socioeconomic realities, while the machinery of building approvals is unnecessarily sluggish and fraught with malpractice. The FMW&H has caused these laws to be reviewed and updated and a draft was placed before the Government in November 1991 for approval and adoption.



E. Mobilization and allocation of financial resources

It has already been globally recognized that

"for the shelter sector to operate in an optimum manner, there will be a need to channel an appropriate level of resources into this sector, in line with an enlightened understanding of its role in the development of the national economy. Financial resources will have to be mobilized in three important areas: public infrastructure investments, operation and maintenance; housing financing; and explicitly targeted subsidies to enable needy families to meet basic shelter needs" (UNCHS, 1990b: 26).

The question of how this recognition is applicable in Nigeria is examined below. The three areas mentioned above are discussed separately.

1. Financing for infrastructure

Currently, the common practice in Nigeria is for the public sector to be directly involved in the provision and operation of infrastructural services. Normally, the Government makes annual budgetary allocations for infrastructure. It is then left to its officials (through direct labour) or for contractors to build or install the road, water-supply and drainage systems, sewerage networks, water-disposal electric power and communication facilities in new residential layouts. But because of inadequate funding, coupled with budget fluctuations, the high cost of these services and the influence of spiralling prices, it sometimes takes up to 10 years to provide these services to a layout after its development. Consequently, in many cases, development precedes the installation of infrastructural services. This makes it even more difficult and costly to provide them later. The impact of this situation in terms of shelter provision and availability is that houses built in these types of layouts are shunned by prospective renters unless as a last resort.

Experience shows that the responsibility for the provision of infrastructure and services is often beyond the financial capability of the public sector, especially at the local-governrnent level. Thus, only the federal and state governments have generally found it possible to undertake services for infrastructural development. However, two recent developments associated with the National Housing Policy has changed this.

Table 3. Programme outline for private estate developers, Lagos

Type of scheme Developers responsabilities


Estimated execution time(years), by area



Urban fringe


Limited lay out

Preparation or provision perimeter survey, lay out earth roads, functional drainage, beacon sheets, report on programming.




Comprehensive sites-and-services

Preparation/provision of: perimeter survey, lay-out plan, beacon sheets, functional drainage, tarred roads, sewage water (borehole), and electricity, feasibility and viability report





Preparation/provision of: perimeter survey, lay-out





plan, beacon sheets, tarred roads, sewage, pipe



borne water, electricity and telephone lines feasibility and viability report, design and construction of buildings


Source: The Guardian, 8 January, 1990.

The first of these developments is the entry of private-sector developers. Private developers in Lagos State like HFP have acquired tracts of lands, laid them out as essentially residential estates and have commenced actual development (see table 3). Thus, the funding of infrastructural development will now depend less on annual government budgetary allocations and more on the money and capital markets. Furthermore, to reduce interest payments, the private-sector developer is likely to execute jobs faster than the public sector.

A second positive development on the infrastructure development scene is the establishment of the Infrastructure Development Fund (IDF), a source of long-term soft loans for state and local governments and their agencies to support infrastructure provision. The origin of this programme lies in the recognition by the Federal Government of the need for an appropriate financing mechanism for urban infrastructure and services and for increased resource mobilization, investment prioritization and programming. While it is expected that the structural adjustment programme would in time alleviate the financial crisis, the states urgently require a viable and sustainable financial mechanism for urban infrastructure and services.

Problems of city-wide infrastructure and urban improvement financing began to be addressed under subsequent projects in the erstwhile Nigerian States Urban Development Programme in the states of Benue, Ondo and Gongola (these are now sub-projects of the IDF). During technical and fiscal preparations and surveys of these projects, the need for a sustainable mechanism for funding investments became increasingly apparent.

In 1983, the FMW&H requested the World Bank for assistance in finding an institutional solution to the problem. The IDF concept was proposed and accepted by the Government in June 1985. Subsequently, consultants were engaged to study the issue of the institutional location of the Fund. Their recommendation to license some of Nigeria's merchant banks to operate the fund was adopted as the institutional framework for the Fund. The Federal Government's acceptance to utilize the merchant banks in this venture is a major policy breakthrough and will facilitate private-sector participation in the financing of urban infrastructure.

The primary objective of the IDF is to initiate the establishment of an urban infrastructure wholesaling mechanism. This mechanism would assist states to manage, maintain and consolidate existing infrastructure and services and to improve financial management and resource mobilization. An equally important and complementary objective of the project is to assist individual states to improve infrastructure investment planning and prioritization.

The institutional framework of the project relies on the demonstrated managerial strengths and track records of the merchant banks. A few banks were selected to serve as financial intermediaries for the project. These were: Continental Merchant Bank Limited, Nigerian Merchant Bank Limited and NAL Merchant Bank Limited. The banks were selected on the basis of size of assets, quality of staff, interest in lending to state governments, willingness to move to longer-term lending for infrastructure projects and readiness to make the changes in their operations and procedures necessary to help states improve their project execution, resource mobilization and financial management capabilities. The minimum size asset base regarded as necessary to serve as an IDF financial intermediary is in the range of N300N400 million ($1.5-2.0 million). Additional merchant banks or other financial institutions may in future be selected as the IDF expands. Recently, Diamond Bank Limited, a purely commercial bank has been added to this group.

The changes introduced by Lagos State (see section I.E.1 and table 3) are expected to relieve the public sector, both financially and logistically. The public servant, for instance, who previously would be engaged in taking his/her staff to the site to instal water pipes or electric poles would now be freed by the private developer to concentrate on specifying and controlling the standards to be met by the developers. In this regard, one sees the changing communities and NGOs undertaking direct responsibilities, in the provision and/or operation of infrastructure and services.

Lagos State was not alone in moving towards an enabling strategy, even before the formal launching of the National Housing Policy. In the community of Ota (Ogun State) a sites-and-services scheme, Benjaville Suburbia, is being undertaken by a private developer. It involves roads (15 km, N9 million), water supply (N 14 million), electricity supply (N6 million), telephone (300 lines, N5.5 million) and recreation facilities (N3.9 million).

At a different and larger scale of operation in the provision of infrastructure and services, the big public corporations - Nigerian Electricity and Power Authority (NEPA), the state water boards and authorities, etc. - are very much in firm control of the situation. There are serious moves to commercialize these operations across the board, in line with the structural adjustment programme. Indeed, both NEPA and NITEL have gone commercial to improve their effectiveness.

From the above, one realizes that adequate investments in infrastructure networks are crucial to meeting shelter needs. Equally, payments for infrastructure need to be collected from users and from those who benefit from increased land values as a result of infrastructure improvements.

2. Financing for housing

Housing finance is the provision of finance or capital for housing. There are three ways of looking at this: housing finance can be taken to mean the capital required for the construction of housing or housing projects, the resources required to acquire or access housing by households, or the credit supplied by housing finance institutions (UNCHS, 1991: 1).

Housing finance has been identified as a key component of a shelter strategy. It is therefore, mandatory for governments to ensure that an appropriate environment is created for the mobilization of funds. The development or reform of institutions engaged in financing housing should be part of an overall effort to strengthen and develop the financial system of a country. The objectives of such an effort should be geared towards the promotion and mobilization of savings, reduction in costs and improvement of the efficiency of financial intermediation, thereby promoting free movement of capital throughout the national economy.

In the past, public-sector efforts to stimulate savings for shelter were insignificant in Nigeria. They consisted of the savings and loans units of FMBN and the state housing corporations, none of which could be described as successful. However, some significant changes may have been recorded under the new National Housing Policy which seeks to encourage and stabilize contractual and voluntary saving schemes whereby individuals obtain future housing loans at low cost, and save at low deposit rates.

The policy also incorporates a mandatory home savings scheme within the framework of NHF, with the following terms:

• Participation in the scheme shall be by workers earning N3000 or more in both the public and private sectors of the economy;

• Such participants shall be required to contribute 2.5 per cent of their monthly salaries to NHF;

• An interest rate of 4 per cent shall accrue to such savings/contributions made as stipulated above;

• The savings/contributions can be withdrawn as retirement benefit plus accrued interest at commercial rate, by contributors who for any reason could not utilize the housing loan facilities available under the scheme.

A mechanism similar to the clearance certificate is also being utilized to gain the participation of the self-employed workers in the scheme.

3. Targeted subsidies

In Nigeria, the Government has all along engaged in the development of layouts for residential purposes. This usually involves the provision of subdivided land and the necessary infrastructural facilities at a very high cost. It is normal practice that each plot allottee is charged a token fee as development charges while the Government bears the bulk of the costs. This could be regarded as indirect subsidization. For example, in the implementation of the sites-and-services programme, there is evidence of cross-subsidization whereby the larger plot sizes are charged more premiums and development charges. Recently, the FMW&H built 100 one-bedroom prototype housing units at the Isheri-Olofin Housing Estate to alleviate the housing problems of junior civil servants. The production cost of each flat was N35,000 ($1750). Each unit was sold for N25,000 ($1250). This represents a subsidy of N 10,000 ($500) or about 12 per cent which excludes the price of land. The prototype housing scheme is an experimental direct construction effort aimed at providing affordable housing especially for low-income groups. It is usually allocated through the balloting method.


F. Shelter production and improvement

1. Land management

The availability of land constitutes an important factor in shelter production or improvement. In Nigeria, the Land Use Decree has had both positive and negative impacts on shelter production. In some ways it has helped to curb land speculation. In the recent past, Government has allocated vast tracts of land to private development under special arrangements. Since land has become a limiting factor, it is offered as a government input to shelter production. Land, thus, becomes a kind of indirect subsidy.

The goal and objective of the Land Use and Settlement Development Policy in Nigeria has been to "ensure easy access to, and efficient utilization of land for public and private use and promote balanced regional development and growth". However, the noble objectives of the Land Use Decree are yet to be realized. The constraints include:

• Lack of follow-up action in promulgating supplementary legislation for effective implementation of the Decree;

• Failure of the Land Use Decree to spell out the rights and powers of the Federal Government as trustee of land which seriously hampers the Federal Government's efforts to acquire suitable land in the states for development purposes;

• Cumbersome procedures for obtaining certificates of occupancy and Governors' letters of consent for mortgage purposes;

• Failure of the Decree to set up realistic yardsticks for determining compensation payable by government for improvements on acquired land;

• Delay and non-payment of compensation for improvement and economic crops and trees on acquired land.

To achieve the goals and objectives mentioned above, the Government inaugurated a committee to look into the constraints. The review has gone through many stages and was, in early 1993, at the final stage where it is being given final touches by the Law Reform Commission for promulgation.

2. Infrastructure

The lack of infrastructural facilities is a serious constraint to shelter production. To attain the quantities of serviced land required, infrastructure needs to be provided at standards affordable for the target populations and providing agencies. Unfortunately, shelter-related infrastructure has not been given the priority it deserves in Nigeria until quite recently.

The financing mechanism of infrastructure provision has been exhaustively dealt with in an earlier section. In this section it is the physical relation of infrastructure to shelter production and improvement that is discussed. As table 4 clearly shows, the quality of the existing shelter stock in Nigeria is low, partly due to the low level of available infrastructural services. By the early 1980s, it became clear that although there were national programmes for the provision of shelter, there was no parallel infrastructure financing mechanism in the housing sector. Consequently, the idea of IDF was articulated and approved by the Federal Government, as a mechanism to assist the state and local governments in Nigeria to obtain long-term financial credit for identifying, appraising and cofinancing infrastructure investments. The objectives and types of infrastructure to be funded have been discussed earlier.

Table 4. Shelter quality in southern states of Nigeria




Buildings more than 24 years old



Buildings needing major repairs or dilapidated



Buildings without pipe borne water



Buildings without electricity supply



Buildings without W/C



Buildings without toilets



Buildings without surfaced access roads



Source: FRN, 1982; Onibokun (ed.),1985.

The Government currently limits the aggregate size of IDF sub-project loans in any one state to a maximum of N10 million ($500,000), to spread the facilities to as many states as possible. Sub-projects are currently being executed in three states (Benue, Gongola and Ondo) while prioritization studies and sub-project preparations are taking place in a few other states (Akwa Ibom, Kano, Katsina and Niger).

The IDF programme is currently restricted to urban investments. Its overall size (a maximum of N40 million per state or N840 million nationwide), needs to be increased substantially. Nevertheless, the IDF programme is a welcome participatory strategy for the provision of infrastructure, which had hitherto depended almost entirely on irregular government budgetary allocations. Furthermore, its advantages are quite obvious. Table 5 illustrates a programme in which the public sector is playing a (generally) facilitating role, leaving the bulk of financing and, to some extent, management to private and external sources. Success with the initial projects may provide the encouragement needed to expand the programme in terms of financial scope and its national coverage.

3. Building materials and technology

Building materials and components constitute 50-60 per cent of the total cost of construction inputs in Nigeria. Consequently, this sub-sector cannot be left to develop haphazardly. To stem the current indiscriminate import of building materials, local capabilities and resources must be developed.

The rapid increase in the cost of basic building materials began after the civil war. Other major increases coincided with the Udoji award and the mismanagement of the economy since the beginning of the last civilian administration. During these periods, sharp rises were recorded for all categories of building material. The major causes of high construction are:

• High demand for building materials arising from post-civil-war reconstruction, creation of new states and the oil boom;

• Adoption of high space standards, costly specifications and over-design;

• Massive imports of building materials;

• Over-priced contract costs;

• Inefficient distribution system aggravated by intermidiaries and high transport costs.

Nigeria should gradually and systematically develop appropriate capabilities to reduce construction costs and achieve self-sufficiency in the production of basic building-materials and components from local resources at affordable cost. The public sector has had a long-standing interest in building-materials production. Under the import-substitution policy of the first National Development Plan (1962-1968), the building-materials sub-sector was earmarked for action. Many government-sponsored building-materials factories were established at that time. Cement was the most popular of the materials in this regard, although factories for paints and roofing materials were established. The current policy of the public sector is to move away from direct production of building materials towards that of facilitation. The Government intends to expand the scale of building-materials production. To achieve this goal, the Government has decided to pursue the following strategies:

• Develop simple, imaginative and functional building designs, realistic specifications and space standards to facilitate cost reduction, affordability and acceptability;

• Develop appropriate technologies to facilitate production and use of local building materials;

• Encourage and support originality and creativity in housing projects. The products of such initiatives are to be made available to users.

To expand the production of building materials, plans are underway to determine, on a continuous basis, the consumption pattern of basic building materials. Specifically it is intended to promote the establishment of cottage and small-scale industries to produce building materials and components from local sources, such as clay, brick, concrete products, timber etc. In addition to these measures the Government has decided to encourage, through fiscal measures, the expansion of those existing industries that produce building materials and components from local sources. Moreover, it intends to identify new local raw materials available for the manufacture of building materials. These measures will be successful if it is ensured that a substantial percentage of the construction inputs are local building materials and components.

To achieve these objectives of the new housing policy, the Government has decided to pursue the following strategies:

• Reorganize and adequately fund the Nigerian Building and Road Research Institute (NBRRI) with regional centres in order to promote effective research and development in the housing industry;

• Reconstitute NBRRI into the National Building Research Institute (NBRI). The first section of this outfit shall be responsible for the commercialization of the products, components and technique evolved by the Institute;

• Ensure that the NBRI collaborates with other research institutions and centres to carry out research into building materials and construction methods; users attitudes, requirements, preferences and aspirations; and building techniques and construction management, including productivity and cost studies.

The capacity of the building industry to accept and adapt new technologies needs to be enhanced through technical assistance and incentives for innovation (UNCHS, 1990b). In Nigeria, the public sector's support for the development of appropriate construction techniques has been very low-keyed. Its impact upon the shelter-delivery system has been negligible. One of its bestknown efforts is the campaign to replace sandcrete/cement blocks with burnt bricks as the basic building material. This idea was based on the desire to utilize effectively the widely occurring clay soils required for the burnt-brick production. For a time, the use of such bricks was made a condition in all public-sector projects. Yet the campaign failed to "catch on" because of the limited supply of the product, high unit costs and scarcity of labour experienced in the use of bricks (Odimuko, 1990).

It is the intention of the public sector under the New Housing Policy to "develop appropriate technology to facilitate production and use of local building materials; encourage and support originality and creativity in housing projects' and make available to the public the products of such initiatives (FRN, 1990: 19).

As has been rightly observed,

"the whole task of expanding the capacity of the building materials and construction sector should be approached (as is happening in Nigeria now) with the aim of maximizing economic benefits. The obvious target of the sector will continue to be the provision of shelter, infrastructure and similar output' (UNCHS, 1990b).


G. Scope and scale of the shelter problem

1. Housing stock

No official census of the housing stock has ever been made in Nigeria. Yet this section attempts to arrive at a reasonable estimate, based on the total population figures, the average household size and a plausible assumption of the level of shortage in the housing markets, i.e., 25 per cent in urban areas.

Table 6. Provisional population, Nigeria, by state (1991)

Table 7. Estimated household population, Nigeria (1991)









Average household size




Number of households




Source: Achunine, 1993 (citing the 1991 National Census).

The population of Nigeria in 1991 was about 89 million (see table 6). A demographic survey conducted by the Federal Office of Statistics in 1990 showed that the overall average household size was 5.4 persons. The figures for urban and rural areas were 4.8 and 5.6 persons respectively (see table 7). The same survey estimated that 24.4 per cent of all houses in Nigeria

were located in urban areas. Based on the above figures, the total number of households in Nigeria in 1991 is estimated at 16.4 million, of which 4.5 million are urban and 11.9 million rural.

Table 8. Percentage distribution of households, by dwelling types, Nigeria (1984-1985)

Dwelling type



Whole building













100 0


Source: FOS. 1986: 53-54.

If one further assumes that the housing shortage in urban areas is 25 per cent, the total urban housing stock would be about 3.4 million units.

Table 8 presents the official figures from 1984-1985 on the volume of different types of dwellings in Nigeria. The reliability of these data, however, is very low. First the terminology on house types is unconventional. For example, "single" is used to refer to maisonettes and duplexes, and sometimes to semi-detached houses as well. Secondly, some of the figures in the table are rather unrealistic. The figures do, however, provide a rough indication of the actual distribution of dwelling units by types. The dominance of the room type of dwelling in both rural and urban areas, for instance, is made quite clear. Informative as this table may be, the contents do not portray any realism to what is on the ground. Based on concrete experience in both urban and rural areas, as well as discussions with various observers, Achunine (1993) has estimated the composition of the housing stock in Nigeria as is outlined in table 9. The table indicates that the vast majority of housing units can be classified as either rooms (74 per cent) or detached bungalows (17 per cent). ID the urban areas, however, flats are estimated to account for about 15 per cent of the total housing stock.

Table 9. Estimated housing stock, by dwelling types, Nigeria (1991)







Units ('000)


Units ('000)




Maisonette (mansion)














Detached bungalow




2 289


2 627

Semi-detached bungalow
















2 194


9 200












3 373


11 848



a 25 per cent housing shortage assumed for urban areas.

Source: Based on Achunine, 1993.

Available data indicate that in rural areas, three out of every four households are owner-occupiers. The remainder are either paying rent or living in their units free of charge (see table 10). The dominance of owner-occupier households is understandable in the rural setting where the standard of housing is modest and almost every household is able to erect some form of shelter for itself without the usual institutional, regulatory and other constraints associated with shelter development in urban areas. ID urban areas, however' only one out of every three households is an owner-occupier. Even in the best of times it is difficult for the average household to own property in the urban area. Since the early 1980s, Nigerians in urban areas have experienced very harsh economic conditions. The prospects for the average household of becoming an owner-occupier have thus diminished even further.

Table 10. Housing tenure, Nigeria (1984-1985) (percentage)

Type of tenure















Source: FOS, 1986:53-54.

Table 11. Estimated housing needs Nigeria (1991 -2001)


Urban areas

Rural areas


Housing stock 1991

3 373

11 848

15 221

Estimated number of households 2001

7 289

15 295

22 584

Required output 1991-2001

3 916

3 447

7 363

Required annual output, 1991-2001




Source: Based on Achunine, 1993

Table 12. Household income groups, Nigeria

Monthly household income (N)

Percentage of total population

< 100





1 4



500 +




N= 4668 households.

Source: FOS, 1986.

The vast bulk of housing production in Nigeria's urban areas has been produced by the informal sector. Achunine (1993) estimates that about 70-80 per cent of all housing units produced in Nigeria's urban centres in the past have been built by the informal sector.

2. Housing needs

Table 11 provides an estimate of shelter needs in Nigeria for the decade 1991 to 2001. It shows that - given the estimated current housing stock, assuming an annual increase in the number of households of 5 per cent in urban areas and 2.5 per cent in rural areas, and a target of one housing unit per household in 2001 - the annual housing need between 1991 and 2001 is 392,000 units in urban areas, and 345,000 units in rural areas. The current housing deficit was above estimated to 25 per cent in urban areas, i.e., 1,126,000 units.

Table 13. Income groups, Nigeria (1992)

Income grup

Percentage of all households

Monthly household income (N)












2500 +

Source: Achunine, 1993

The quality of the housing stock in Nigeria is poor, particularly in the rural areas where the majority of the people live. Table 4 shows that there is a widespread lack of facilities in urban areas as well. Possibly the most striking issue in the table is that 20.6 per cent of all housing units in urban areas (694,000 units), and 32.1 per cent of all units in rural areas (3,803,000 units), are more than 24 years old. If all these old units are taken as a (modest) estimate of the number of units in need of replacement or upgrading, it implies that the total current housing deficit is about 5,623,000 units, of which two thirds is in rural areas. If these are to be replaced or upgraded during the 19912001 period, it implies an additional annual need of 70,000 units in urban areas and 380,000 units in rural areas. Legitimate as the need for upgrading of existing shelter stock may be, this need fades into relative insignificance compared with the immediate need for new units to satisfy the requirements of an population growth of 1.4 million people per annum.

Table 14. Housing prices by types, Owerri, Nigeria (1992)

Housing type

Estimated market value (N thousands)

Estimated monthly rental value (N)







Detached bungalow w/1 bedroom

150 180


Detached bung&low w/2 bedroom



Detached bung&low w/3 bedroom



Detached bungalow w/4 bedroom


1,200- 1.500

Semi-detached bungalow w/2-3 bedrooms



Block of flats' w/1 bedroom



Block of flats' w/2 bedroom

1,000- 1,200


Block of fiats' w/3 bedroom



Room in tenement building



Room in "shanty" dwelling



a A typical block contains 6 flats.

b For entire block.

c For a single flat.

Source: Achunine, 1993.

3. Housing demand

The demand for housing is a reflection of the ability of households to pay for them. Thus, an examination of household incomes and prices of housing units provides a basis for assessing housing demand. There are no current data on the distribution of household incomes in Nigeria. The most recent survey on the matter was carried out in 1984 and the result is summarized in table 12. About the same time that these data were being collected, the official definition of the low-income groups, at least as far as housing policy was concerned, included all households earning an annual income of N3000 or less. This group was estimated to account for over 70 per cent of the Nigerian population (FRN, 1985).

Table 15. Household incomes and dwelling type options, Nigeria (1992)

Income group

Dwelling options


Room in shanty dwellings


Room in tenement dwelling; and 1-bedroomed flat (in block of flats)


2-3 bedroomed flats; 1-2 bedroomed detached bungalow; and 2-3 bedroomed semi-detached bungalow


3-4 bedroomed detached bungalow; duplex; and maisonette

Source: Achunine, 1993.

The economic polices and conditions in Nigeria in the 1980s were devastating. Although, in numerical terms, household incomes have risen by a factor of about 5 since 1987, the purchasing power has declined by a factor of about 8. Thus, the average Nigerian household is worse-off today than in 1984. Based on this scenario, Achunine (1993) has estimated the income distribution in 1992 as is outlined in table 13.

Housing prices vary considerably from one part of Nigeria to another, and from one city to the next. The 1992 situation in Owerri, the capital city of Imo State, a medium-size city, is shown in table 14. Table 15 indicates the average household incomes available for housing (assumed to be 25 per cent of monthly income) and the dwelling type options open to each income group. The table clearly shows that the household incomes of the lowest-income group are too low to allow them to exercise any effective demand in the open market for formal housing. These households cannot afford any form of formal housing without subsidies. This leaves a balance of 70 per cent of households with sufficient income capacity to demand some form of housing in the market. Given an estimated 17 million households in 1992 and an annual growth rate of 2.5 Her cent. the expected number of households in 1997 would be 19.2 million. This means that over the next five years there would be a total demand in the formal housing market for 2.2 million units or 440,000 units per year most of which would be single rooms and one-bedroomed flats.

Table 16. Housing demand, by type of dwelling units (1992)

Dwelling types

Percentage of demand

Rooms; and l-bedroomed flats


Two-bedroomed flats; and 1-2 bedroomed bungalows


3-5 bedroomed bungalows; duplexes; and maisonettes




Source: Achunine, 1993

The poorest 20 per cent of the households do not earn enough to participate in the formal housing markets. In the urban areas they resort to various informal housing arrangements for themselves. These arrangements include the setting-up of shanty dwellings of their own on land not belonging to them (squatting); renting shanty dwellings; colonization of uncompleted multiple-storey buildings; occupation of vacant spaces in public buildings at night; etc.