The slowdown in the Nigerian economy is further widening the gap between housing demand and supply in the country. Declining earnings of individuals has also narrowed housing affordability. However, Lafarge Africa Plc believes that no matter the country’s economic circumstances, the citizens will always live in houses. In this interview, LOREN ZANIN, CEO, Lafarge Aggregates and concretes, speak on the company’s effort at making housing affordable as a response to the country’s growing housing deficit.
Question: In Nigeria, we have always known Lafarge as a cement manufacturing company, but all of a sudden, we started hearing about affordable housing development. What informed the decision to go into housing development?
Zanin: Housing development is not sudden decision. We have been into housing for 193 years, but now we are focusing on what we want to deliver. It is not just in Nigeria, in Malawi too we have affordable housing. ; in France we also do affordable housing because, even in the developed countries, there is need for low cost housing.
For us, affordable means building homes that are accessible to the vast majority of Nigerians. We have a team that builds houses that are affordable and will last for a long time and people will be happy to live in.
So, Housing development for us, is not new; we are just trying to make it more efficient and deliver more quality units to home seekers. This year, our target is to build at least, 3000 homes in Nigeria. Actually, we want to go very far; so if we can achieve more than that, we will be happy.
Question: Delivering 3,000 housing units is no means job. What measures have you put in place to make it happen?
Zanin: We have gone into partnerships and a good example of this is the MoU we signed recently with Fortis Micro-finance Bank. With this, we are able to reach more home seekers as well as better spread. Other examples of our partnerships is with Shelter Afrique, Lapo Micro-finance Bank which we started from the beginning; We will be able to deliver more with these partnerships.
We look at ways we can take advantage of these partnerships, relationships and in-house strenght to make sure that we deliver value for and also avoid some risk. Again, the whole country is waiting for the government to do something but there are also a lot going on in the business space; we see projections and try as much as possible within them.
Question: The business environment in Nigeria is though at the moment because the economy is slowing. how are you coping with the challenges?
Zanin: Some of the challenges are beyond our control but we have to carry on because the future for Nigeria is bright. There are a lot of oil, gas, agriculture and people. so, the potential is very high and we are positioned to take advantage of that. This year may not be as good but next year we are hoping that things will be much better. we cant just stop because things are though.
we dream big and the sky is our limit. We have 17 million housing unit deficit ; That’s a lot of houses to be built and the population is growing every day. This number was giving two or three years ago, now there must be an increase because, construction in Nigeria is very slow relative to population growth.
Question:Which state governments in Nigeria are you in talks with for your affordable housing initiative?
Zanin:We are already working with Ogun State and in talks with Lagos State which I can reveal for now. We are in talks with others too which I cannot reveal now. We are working in the North-East too; there are a lot of displaced people out there, so we are working with them.
Question: Due to the situation of the economy, most developers are shying away from housing development, especially affordable housing. What is your take on this?
Zanin:People will always live in houses no matter the situation of the economy and currently we are talking to a few developers, especially in Asaba where there are a lot of units to be built. So, I don’t think a lot of developers are running away, rather they are trying to work with the government to get land and build even in these tough times.
Question: Some of these developers say they can’t go into affordable or low-cost housing because the margins are low, but here you are, doing it. How have you been coping?
Zanin: What we bring in is speed. If you do block homes, you will have a lot of wastage but with our technology we are faster and we have less wastage. So, all that put together reduces the cost of housing up to 15 to 20 percent. When you build more, it costs less.
We are not into building homes for individuals; we can, but it is going to be very expensive. There are ways for people to participate anyway. It depends on the individual and how he wants to come in. where we achieve good cost that we are talking about is where there is economy of scale. However, the cost of mortgage has been a major setback.
Question: Affordable Housing has become a popular terminology and people often wonder how ‘affordable’ affordable houses are. what is your model for affordable housing; are you in competition with developers?
Zanin: ‘Affordable housing is a general term. Yes, it is relative. #50 million housing can be affordable for some people, while N2 million can be affordable for others. So, it depends on the home seeker. What we are doing is making homes available; creating access to home ownership and one of the major thing is cost, which is why we have gone into this affordable housing initiative to bring cost down through technology.
Even though housing is not available for the base of the pyramid, it is not also available for the base of the pyramid, it is also not available for the middle class. So, affordability is relative.
Question: In your partnership with State governments, what policies have you been confronted with that you would like to change?
Zanin: One of the big issues is the mortgage interest rate for home seekers which is very high. And for a certain class of the society, the government should make facility lower. Some people can afford to pay 20 percent interest rate, for instance, but for some others, it should be much lower. That will be a huge advantage if government can reduce the cost of mortgage. it is a big factor in the housing provision.
Question: In your dealings with the government, to what extent are policy shift affecting your projects?
Zanin: Policy summer is a natural fear in Nigeria because of the past but, in our case, we have not had any troubles. the hand over was smooth and the supporting strong.
Question: In Developed Cities such as lagos, what kind of buildings would you recommend?
Zanin: A lot of people don’t want to live in high-rise buildings; they want a bungalow with some space around them. It is a real delima; but people want space and land to put gardens around their houses. That is a decision for government to make.
Courtesy: Business Day