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Yes, it's difficult to access National Housing Fund -Abiodun Oki, LSDPC CEO

Posted by By CHIDI NNADI on 2005/05/03 | Views: 659 |

Yes, it's difficult to access National Housing Fund -Abiodun Oki, LSDPC CEO


The coming of Mr Taofeek Abiodun Oki to the Lagos State Development and Property Corporation (LSDPC) in 2003 brought with it some significant changes that marked a new beginning in the annals of the 23-year-old corporation. Prior to his coming, the helmsmen of the multi-billion naira housing corporation were called general managers.

The coming of Mr Taofeek Abiodun Oki to the Lagos State Development and Property Corporation (LSDPC) in 2003 brought with it some significant changes that marked a new beginning in the annals of the 23-year-old corporation. Prior to his coming, the helmsmen of the multi-billion naira housing corporation were called general managers.

Thus, Oki is the first managing director and chief executive officer of the LSDPC just as he is the first non-professional in the building industry to head the place. Also, he is the first CEO to run the institution as a fully commercialised entity.

Besides, the new LSDPC boss under two years in the estimation of the workers has done very well. The workers are applauding him for paying their 2003 end of the year bonus as well as reviewing their basic salary upward by 50 per cent, among many other incentives.

And Oki seems to be enjoying it all, hoping one day to become a housing professional himself, probably by becoming a member of one of the professional bodies.
In this encounter with Daily Sun, he bares his mind on burning issues in the building industry and the efforts the LSDPC is making to realise the dream of the Lagos State government in providing affordable shelter for Lagosians. Excerpts:

Introduction
My name is Taofeek Abiodun Oki. I will be 50 years old on December 26. I have been a banker until I came to the LSDPC. I left the University of Ibadan in 1978, and I started life as a banker in 1982. I left Oceanic Bank in 2003 to join this corporation. I think I have enjoyed being a banker. And I think, I'm still a banker because I'm still interacting with most of my colleagues in the industry. I'm married and have children.

Establishing LSDPC
Lagos State Development and Property Corporation was formed through an edict in 1972. But before then in Lagos State, we have the Lagos Executive Development Board, the Ikeja Area Town Planning Authority .... All these were joined together to form the LSDPC in 1972. The corporation was formed in order to transform Lagos, as it were then the capital of Nigeria, into a more befitting environment. Then we had a lot of slums and ghettos around. And its population had really shot up and the environment needed to be developed by the state government.

Primarily, the LSDPC is focused on providing shelter, housing in Lagos State. It was established through an edict to acquire land, develop, build properties and also provide infrastructure in terms of drainage, roads to a particular development or estate.

Coming to LSDPC
I came on board as Managing Director on November 18, 2003. And before then, the LSDPC has been the foremost shelter provider in Nigeria. We have had a lot of estates in Lagos State.

Since I came in, we have completed and sold over 60 units of three-bedroom luxury flats at the Lekki corridor. We are almost completing another 52 units of the same type of structure. When we leave this area, we will go to Dairy Farm, which is around Pen Cinema, Ogba. We have 138 units of two-bedroom and three-bedroom apartments there. We are getting the keys from our contractors by the end of May. We have plans for Apapa and Ketu areas too. In all, we are going to have over 500 units before the middle of next year.

I will like to see a situation where the government can be proud of providing shelter for its citizens. It is the primary need of any human being to have shelter. And if this can be provided, we would have met one of our objectives. We are here to provide shelter. Really, when you think of housing, you think of LSDPC.

Housing for all
Yes, the government can. It all depends on the way we are going about it. With the state of our economy now it will be very , very difficult to provide "affordable" houses honestly, because when you talk of materials involved, which you are not in control of as a developer; we source these materials and the prices they give to us are what we pay for. Then we have to pass these over eventually to the owner of the houses. So, except the Federal Government comes out with a policy to say, if you want to build a house, you can go to a certain place to purchase your material at certain price. But if we have to continue to go to the same open market to buy materials, it will be difficult.

National Housing Fund
Yes, you have the National Housing Fund, which is being kept by the Federal Mortgage Bank of Nigeria, but the point is that if I am going to access fund from the Federal Mortgage Bank, one of the conditions before having the fund is that you should have a local bank guarantee. So, we are going back. If I ask for a bank guarantee from my local bank, there are some charges that I have to pay and this will be added to the interest on the Federal Mortgage Bank loan.

Sincerely speaking, we have a lot of fund in that account. And what we are looking at is if the government can allow contributors to access the fund through the Primary Mortgage Institutions. But there is a limit, N5 million per contributor. What can N5 million do now as the contributor has to buy land for about a million? Can N4 million do whatever he wants to do on that land? And there are certain things you have to provide before accessing that loan. You need to have your land. In fact, you have to provide its Certificate of Occupancy (C of O) and certain other things.

The only thing is that if they can use the housing corporations of all the states, that is, for them to approach the Primary Mortgage Insitutions, because the problem has been who to guarantee the custumer or contributor. Is it the employer or the housing corporation?
When the scheme was set up the aim was that… if we have really gone through the objectives, I think housing problems would have been ended in this country. The fund is there, but we are not utilising the fund as it were. If you have may be N14 billion of NHF in an account, that N14 billion will develop a lot of estates in the coutnry, which the government can now subsidize to ensure low, medium and high-income houses.

Building an estate
We are developers. If I am building a low-income estate, I have to sell it. If a Primary Mortgage Insitution comes to buy, we will sell it to the PMI, which will now do a mortgage for its contributors, but the mortgage institution has to pay for this. And if you look at the primary mortgage institutions operating now except for a few of them, for instance, Union Homes, which has a very strong back-up from Union Bank that made them to have some relatively cheap source of fund to utilise. If you go further and check another primary mortgage institutions, they don't have that kind of cushion-effect that Union Homes enjoys. So, Union Homes is in the fore-front because it has a lot of funds to play with. Now, the other primary mortgage institutions have to go to the Federal Mortgage Bank of Nigeria (FMBN) to access the NHF, but the conditionalities in accessing the fund is a problem. They have to provide the names of the people they are bringing to access the fund, they have to provide certain documents and you have to be a contributor for certain period before you can access the fund. So, we have a lot of people who have contributed to the fund but have not gained anything from it. It is quite unfortunate.

Cost of housing
Our houses are very cheap in the sense that, like I told you, I have sold three-bedroom luxury flats at the Lekki corridor for N12.5 million per flat. I am competing with private developers there and the quality of what I put there can easily stand for anything above N20 million. I have a very strong marketing team. For the one at Ogba, the two-bedroom is N4.5 million and the three-bedroom is N5.5 million and they have almost been sold out at 80 per cent completion stage.

Our success
We will attribute this to one, highly professional and committed human resources. We have a very strong team that is well focused. In a corporation like this, we have most of the professionals, the quantity surveyors, architects, engineers who are backed up by efficient services departments like marketing, finance and administration. We have a very strong team that has helped us in achieving our objectives.
The second one is finance. Finance has always been a constraint because once you go to a site you need finance to back it up. If you know that your period of construction is six months, you try to do it within that period so that inflation or anything else will not come into your pricing. We have been able to get good sources of finance and they have really encouraged us.

Marketing strategy
I am a trained marketer. We have a lot of products in other sectors, but in the housing sector, your product is the house. In the banking sector, we have education products and many others and all the banks are selling similar products. So, it is the way you package and market your product that it will sell. My own product is house and we have a lot of other developers selling the same product. So, you have to show your client or customer that this is the way you want your product to be. And you have to make sure that if you are going to construct, even if you are going to use not-too-high grade materials in finishing, you have to ensure the work is neat and well done. If you are going to use a paint that is of low quality, make sure the paint is well applied. If you are going to make use of high quality paint, also make sure it is well applied. If the high quality paint is not well applied, there will be nothing to write home about it. You just have to package your product very well. That's why when I came here I set up a very strong marketing team that go out to carry the customers along and to show them our new projects.

Cost of building materials
The inputs to housing include cement, iron, roofing sheet, wood, doors and paints. For paints, we have a lot of companies manufacturing paints here, but the cost of production is high because of the level of inflation in the country. Besides, there are some inputs you will have to import. And because the cost of production is so high they have to pass these to us. Cement is the same thing. If cement now costs only N100 per bag, I don't see why I cannot build affordable houses, say for less than N800,000. But if I am paying N1,000 for cement, stretching to N1200, there is no way I can do that. And until we can have a government policy that can change all these, we have no choice.

It is not that the government is not funding the research institutes, but what are we researching into? Are we having an alternative to cement? Are we having an alternative to iron steel to back up our structure? Are we having an alternative to roofing sheets? If there are alternatives to these and we can research into them, then we can now stand to compare the price advantage to the alternatives. But if you have no alternative to cement, you still have to continue using what you have. And if there is no alternative to steel in the sense that for any structure you have to back it up very well to ensure you don't have series of collapsed buildings, which had occurred before, primarily because some developers tried to cut corners. In the LSDPC, we have had none of these because we don't compromise on standards. Where we are supposed to use certain percentage of material, we have to use it.

The property developer
It takes a lot to be a developer. You must have the professionals to work for you, the QS, the architects, the civil engineers, the builders etc. But nowadays, with a lot of developers around, you find out that they don't bother to have all these professionals. And even when they do, what these professionals advised them to do, they will do otherwise. But we cannot do that. It is what the QS said we should do, we do. We have a team comprising architects, civil engineers, and so on. But you find out that some developers have only one person, someone they call the foreman and he is doing the job of over 20 people at the site. So, that is one of the major problems in the industry.
Going further, I think that problem is going to be solved very soon because to buy a house, you would want to see what you want to buy, and not to wait for when it is completed.

Land Use Act
I get my land straight from the Lagos State government. And our problem in this country is that once you buy a land from a private source, I think, even before buying it, you are supposed to have carried out some inquiries in the government land use registry. That search will put you in a position to know whether that land is free from acquisition or whatever. And when you buy the land, at the end of the day, there will be a consent from the government and before a consent is issued, a fee is attached to it. So, while buying the land some people would have said, yes, I have bought a land and there is no more problem. And while they are applying for consent when a fee is demanded, they will say, but I have paid for the land.

But I obtain my land from the Lagos State government and that is part of what is due to me, to develop houses for the people of the state.
In my own case, the land is not given to me free-of-charge because I'm now a fully commercialised corporation. So, I'm competing with the private developers. If I found out there is a land that I can really use, I apply for it and pay. But there might be some concessions from the state government.

Our estates
I have mentioned earlier that I sold my Lekki flats at N12.5 million. I know the going rate for such houses in that environment. Maybe that is why people come to my flats and also because of the quality I have put in there. Because once I'm setting up an estate, like in that particular estate, I'm providing generator for them and ensure that all infrastructure are in place. I don't want people to start bringing in their samll generators. It is a luxury estate and I want people to enjoy the environment with good security. In the others, we are also providing generators to cater for the street-lights and water. That cost is not added to the prices for the houses. These are some of the concessions we have made on behalf of the government to the masses.

Natural disaster
Natural disaster can occur anywhere, but our prayer is to avert such disasters. We are not professionals in that area. It is only geologists, who can say at so, so time, there will be a movement below the sea level and as a result of such movement there will be a disaster. But with what Lagos State is trying to do at the Bar Beach, I think we can easily avert that kind of disaster (Tsunami).

The problem of flooding is that most people have gone to the axis that there are so many building in the area. People are just buying land and building houses without proper drainage system. But by the time we have this first phase of the infrastructure, I mentioned before, you will see the kind of drainage we want to do there, so that we will direct the drains to the lagoon. The problem now is that the drains directed to the lagoons are not properly managed. If they are properly managed the impact of flood will be limited.

Financing our projects
In financing our projects, I go to the banks. I was a banker and I know how you can reduce or how you can make profit. If I ask for N300 million with an overdraft, I'm not paying any mobilisation, I pay in stages. They call it stage payment. It works like this, as a contractor, you start with your money and once you are done with it up to a stage, I will pay you and then you go through the other stages like that. And when you get to about 40 per cent completion stage, we start marketing and once we sell, we pay back the money to the bank.

Now, the Dairy Farm project that I told you, I have credit in my overdraft account. So, I stopped interest payment in the last three weeks and the funding is for nine months. But I'm going to use it for only six months because by May, I would have completed the project. So, at the end of the day, I will have a lot of money as profit, instead of paying it back to the bank as interest. So, you have to tighten your financial plan and adhere strictly to it. If you promised to do it for six months, it has to be six months. If you promised nine months, be sure it is completed in nine months.

Economy
A lot of things are wrong with the economy. The only thing we can do is if everybody should try, both the public and the private sectors, to go by genuine policies, we will succeed. If the government can provide enabling environment for the manufacturers to operate, I'm sure costs will go down drastically. Take the manufacturer of candle, for example, he needs to provide his own generator, water and other materials, making the cost of candles produced locally to be more than that of imported ones.

Competition
We are really well positioned now. I can assure you that today, we are the foremost housing corporation in the coutnry. With the number of houses, estates we have developed since inception in 1972, no other corporation can boast of that and we are not resting on our oars. Instead, we are going further in competing favourably with the private developers. No doubt, for you to compete with the LSDPC as a developer, you will find it very difficult, both in terms of quality and service delivery.

Maintenance culture
Once we develop and sell an estate, we maintain it for two years after which we leave it for the residents, who usually form associations. And in our estates, they have very strong associations. If they said they don't want kiosks in the estate, there will be no kiosks. If they say they don't want any illegal structure, they will not have it. These associations are strong and they don't compromise on these. But where the problem lies is in some of our old estates, though they have associations, many of them are not strong enough to control the crowd there.

Unwinding
I do a lot of swimming. I am a member of the Ikoyi Club and Eko Club. I joined the Eko Club in 1985 and particularly, I enjoy doing all kinds of sports.

Dream
My dream is that when we start a project, I won't go to the bank for finance. I would have saved part or 80 per cent of fund for that project at take off. Then, when I get to a certain percentage, I will sell it. That is what comes to mind when you talk of financing a project. If you go to the western world now, for example, Dubai, if someone starts a project and you expressed a desire to purchase it… Let's say, Block A, Flat one, is sold to you, you just pay by instalment and by the time you get to the third instalment, you can sell it off. So, by the time you complete a project, it may have gone through two or three hands. I think that is the kind of system we are supposed to have in the country now, and not to think of how can I get this money to pay? You can pay an initial deposit of 10 per cent when we are conceiving the project and after a month, you pay another 10 per cent, and later five per cent , making it 25 per cent. And by the time, you pay 30 to 40 per cent, you can sell it off.
One, you will have back your 40 per cent and make some profits, but I would have used the money to complete the project instead of going to the bank.

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