August 20, (THEWILL) – Pastor Ugochukwu Chime is the Group Managing Director/Chief Executive Officer of COPEN Group of Companies. He was also National President of Real Estate Developers Association of Nigeria (REDAN). In this interview with Ogbu Sunday, he discloses efforts that have been made by REDAN to solve the housing needs of Nigeria and to also professionalise the Association. Excerpts:
Sir, can we meet you?
My name is Ugochukwu Chime. I am the Group Managing Director and Chief Executive Officer of COPEN Group of Companies. We are into a lot of things — Real Estate Consultancy, Development, Manufacturing, Microfinance Banking, and a lot of socio-economic activities and trainings.
You held sway as the national president of Real Estate Developers Association of Nigeria (REDAN). What were your major achievements?
It has been a very good opportunity for me. What we tried to do was to work on the fundamentals that were created by our predecessors, principally Alhaji (Dr) Lateef Jakande, former governor of Lagos State and then former minister. He was the foundation president of REDAN. He tried and went round the country to solve the need of the masses for housing and even housing for socio-economic development. That was the vision he had as the governor of Lagos State and that was the vision he had also working as a minister of the Federal Republic of Nigeria in 1994/95/96. What he did was to design a vehicle of eliciting private sector developers to engage in the act of providing houses. When I came in as the president, I saw that this effort was already going on; but something was still not there, and that was the means of ensuring that the knowledge base of the developers are efficient. So, we decided to organise trainings because we saw that a lot of developers did not understand the multidimensional and multifaceted nature of the professional knowledge required to be effective in delivering end-to-end-from conceptualisation to facility management of real estate activities.
I was there as head between 2015 and 2020. So by 2012 when I was a member and I saw that we had 85 percent failure of projects undertaken by members, which was incredible. What we needed to do was knowing how to make sure that we train our members. When we had a meeting with SKUMO to be able to make sure that our members understand some of the people who wanted to use the sector to be able to launder money and other negative activities. These were some of the things that we began to do, and began to operate with. These things we have been working upon since that time. We also tried to make sure that we professionalise REDAN. We also made sure that we had a distinction between those who want to participate, a key man driver, who are going to handle hundred of millions, sometimes billions. You must be competent in yourself as the key driver, the managing director, or the key officer of that institution. We decided to engage them in this process of understanding some of the variegated nature of the challenges and the multidimensional knowledge.
We started also the process of endorsement of product and processes. We looked at your administrative set up. We looked at also your approval process. The compliance issues that is the pathway to making sure that we have a genuine property for sale to members of the public. We did that because currently in Nigeria we discover that we cannot sell pure water without registration by NAFDAC. But you can sell a house worth a hundred million without anybody certifying the product, without anybody assuring that it is okay. That is something that should not happen. These were some of the things that we started to do-engaging in registration, engaging in partnership with other institutions. We were able to acquire land to be able to develop REDAN House. Before I came in, there was no land. We acquired land and started the development. We were also able to engage with 14 other institutions including World Bank, Central Bank of Nigeria, to be able to create what we call the Nigeria Real Estate Data Collation and Management Programme (NREDCMP), to be able to gather data for planning, because as an investor you need planning and planning cannot take place without data. And we found out that because of lack of data, investment in the real estate sector became a dangerous exercise. This is so you do not know what you are going to meet. It is a walk in the dark, in a dark tunnel for that matter. So we needed to get that data. So we were able to work with all these institutions including the Nigeria Population Commission, Nigeria Bureau of Statistics, Federal Mortgage Bank of Nigeria, Nigeria Mortgage Refinance Company. That was one of the things I did from 2017 to make sure that we have a veritable platform for collaboration on data gathering, management, and publication so that people can have the data they need for planning to be able to know the absorption capacity of an area. A lot of things were initiated and ongoing by the time I left REDAN.
What is the 2023 outlook of the real estate sector?
The sector holds a very huge potential because a lot of things are on ground. What we needed is to make sure that we now implement a lot of these things. First of all is the fact that the contribution of the mortgage sector to the GDP is 0.5 percent in Nigeria. The contribution of the mortgage sector to the GDP in South Africa is 16 percent.
Nigeria has a bigger population in West Africa. Now if what we are doing by way of mortgage for instance is only 0.5 percent of our GDP, when we upscale it to that, it allows 25 percent of the Retirement Savings Account (RSA) by pension fund contributors to be used for housing in terms of equity financing for their home ownership. If you remember that you have N16 trillion in the pension fund, that means 25 percent of that is N4 trillion. The total amount Federal Mortgage Bank of Nigeria has used over a number of years that they have operated is less than N200 billion. Now, if you have N4 trillion, N4 trillion is 20 times that volume that you have available now. I remember this one was invested by Federal Mortgage Bank over the decade. So that intentionally means that we have a huge opportunity to be able to have this. We have also had laws: the modern mortgage and foreclosure law which assists investors to recover their property if there is a default. All these things dovetail to one thing: that we are making progress in providing housing and using housing as a means of employment generation and socio-economic growth in the economy.
So the outlook is there, but what is required is for us to create interfaces, collaboration between government, private sector, between agencies in the private sector, between agencies in the government sector so that we can design a veritable and functional transaction dynamics, a value chain, a roadmap that will take advantage of all these improvements and opportunities and direct it in a seamless manner so that we do not lose it in a noise of trying to have each silo organisation working on its own. There are a lot of opportunities in the sector and if we are able to sit down, get the data, get to work together, understand what the challenges of each organisation, Pension Commission will not release those funds. There has to be assurance. There has to be guidelines. Many people see this figure and say oh we are doing badly. No. I see opportunity because it means that we have room for expansion. If we are at 99 per cent and there is no room to expand, if at 0.5, then we have a huge room to expand 99.9 percent speaking generally. The second aspect is to look at the fact that currently we have a policy to have that conversation and therefore dimension the opportunities, dimension the risks, and provide avenues for overcoming those risks. And that is a continuous engagement and that is what I believe we need to have.
There is a good opportunity to use the housing sector to be able to create massive employment for our people. That is an area government has not looked at and there are dwindling their fingers and asking what do we do next. When United States has a similar challenge so many years ago, they resorted to the construction sector to build because it is the quickest sector that absorb any fund through it. If you release N100 billion, within a space of few weeks, the activities will be felt by the bank managers, it will be felt by the people who are selling akara on the site, it will be felt by those who are digging on the site. So it has the highest diagonal impact in terms of how we should be able to reframe and rejuvenate our economy.
Report of alleged fraudulent activities of REDAN members in relation with their clients abound and these continue to erode trust in the sector. Advise your members in this regard.
What we are trying to do in that regard, is to create a comprehensive data base of our members, in order to track their activities. During my tenure in 2018, I created endorsement of product and processes, which means REDAN, as a self-regulatory organisation, goes to look at members projects. Did you get the building approval? Is your title to that project okay? Is the house you are building in consonance with the building code? All these things we decided to go with the Nigeria Institute of Building. We were with the Nigeria Institute of Architects so that the professional bodies in conjunction with REDAN will sit down together and say okay we are going to manage this process. We are going to create this endorsement. So once you say that you have met those criteria, we would now be able to publish the list of estates that are compliant so that buyer beware. If you are buying from any other person, we can tell you that this organisation has not been able to meet up with its obligations to clients in the past. They have abandoned projects. They have abandoned obligations to people after issuing them offer letter or whatever it is. So that number one we will be able to do due diligence on behalf of potential clients across the space.
The second aspect which we want to do in every of the state governments is that in conjunction with REDAN as professional body, we should enact some level of policy regulation that will guide activities and so many other things that we are also trying to do, describe minimum standard of knowledge, multidimensional knowledge that any key man driver should have before we would certify you to be somebody who is running a real estate organisation. That is so paramount because if that is not so, then we are not making the difference we desire. I know a friend of mine who was to build a factory and the funding agency, one European bank, said you have to do six months course on strategic management in this institution or the other institution. There was an institution in France, the other institution in the United States of America, or they will not give you the loan. So why will development financing institutions like Federal Mortgage Bank, Family Homes Fund be giving money to people who they have not certified to have this competence? We did not go further to ask for some level of information, the socio-economic needs. Are those houses needed in that location? Can the income of those people afford those houses? Can those number of houses be absorbed by the number of population in that place? These are things we need to do differently. And when we begin to do things differently, you will see that the sector will begin to emerge as a destination of choice for investors.
Are there measures to put in place to checkmate the activities of your members, REDAN members, who may decide not to operate by the rules and standards set out by REDAN institution?
We have a disciplinary committee. So if there is any case that we noticed or is reported to us of default, deviances, we have a disciplinary committee and we will be able to take decisions and apply the necessary decisions and then let the members of public know that this is what we have done.
There is worry among workers that there is no linkage between the National Housing Fund (NHF) and the Contributory Pension Fund Scheme (CPFS) to enable them access funds for housing mortgage. What is your take on this sir?
The nexus has been created. We started canvassing for this about seven years ago that the pension fund, which is being contributed by the same worker and national housing fund, which is being contributed by the same worker will be accessible by them for home ownership before they retire because of the loss of purchasing power. N5 million five years ago is not the same N5 million today in terms of what it can purchase. So why saying you are keeping the money for the person for retirement when the money is losing value so that at the end the person is retiring the value of the money is less than 30 percent of what it used to be 10 years ago. So they have opened that portal and that is why PenCom have come out with the policy allowing that a worker should access 25 percent of what is in the Retirement Savings Account to be able to pay for equity for home ownership, while primary mortgage bank, Federal Mortgage Bank or any other institution will provide the remaining loan amount. That for me is a good development. And like I mentioned before, we have N4 trillion available for that and we need to use it.
Advise President Bola Tinubu on how to best restructure the Nigeria housing sector to keep it afloat in meeting the country’s housing needs, which experts currently put at over 24 million units.
I do not know on the number of units. But one thing I do know, one thing that is incontrovertible, I want him to see housing not as a help to the poor masses, but as a means of engendering productivity in the economy. The COVID has shown us that you cannot ask people to keep social distance when they have only one room containing ten people. Where will the rest go and sleep? Also from the health angle, we have also seen a lot of crime in densely populated areas because it is possible for police to even come in there into the slum. So it is a security challenge. One of the first things he should do is to see housing not as helping the poor people them, but as a means to providing for health needs, increasing productivity, increasing security and increasing employment for the teeming youths of Nigeria. The unemployment rate is over 60 per cent of the youths and that is a time bomb. That is why there are a lot of aggressiveness. So I will advise the government and say can you have a paradigm shift in your understanding of what it represents in the housing sector? It is a means, a veritable means to an end that we want to achieve in the area if employment generation, in the area of security, in the area of health and other areas. It is a means of making sure that we have understanding of the people. It is a means of re-floating the financial sector of our economy. It is a means of stabilising the income flow of institutions. It is a means of getting investments into our country. It is a means of recreating the wealth base of our people. The president is only in charge of physical policy and financial policy. But the land administration policy is within the armpit of the 36 governors. They are the 36 land administrators. Now for you to have an efficient housing policy, the land policy must be managed properly with the housing policy. One key step is to sit down with them and insist there will be a domestication at the state levels of the modern mortgage and foreclosure law and any state that is not willing to do all that needs to be done in reducing the cost of transaction and the time of transaction in the land administration policy of their state will no more receive loans from Federal Mortgage Bank, will no more receive loans from Family Homes Fund because the loans given in the past have been trapped by the activities in the land administration and of the state government and that has to be sorted out and that is a veritable area that Mr President must have to look at. That there has to be a synergisation, a harmonisation, a synchronisation, a collaboration between the land administration policy and the financial policy. These two arms of government must agree so that there will be a seamless flow that will ensure that we have designed a vehicle that will be efficient in carrying out the vision that we have for housing sector and using it as a means for generating employment that our people so dearly needs.
The Association of Housing Corporation of Nigeria, AHCH, recently called for the restructuring of the Estate Development Loan, EDL, currently managed by the Federal Mortgage Bank of Nigeria, FMBN, to make more funds available for mass housing delivery in the country. Do you agree with the association?
The first thing is that there is need to reform the FMBN Act, which has been in existence for so many years. By 2007, they submitted an amendment that the Act should be reviewed and that is the correct thing. The Act should be reviewed because as it were today the problem of Federal Mortgage Bank is arising essentially from the, “there is no ownership” mentality. The workers who contribute money through the national housing fund they have not seen how it is being done, the employers who are eager to see their workers house have no say. It is government that sits down and appoints people to manage funds that does not belong to government. That is a major problem because when people talk about national housing fund all these are manifestations of the structural problems in terms of ownership, control, management of Federal Mortgage Bank. And over the years there have been an attempt to rejig this exercise and be able to create a platform that is okay. So there is an urgent need to restructure Federal Mortgage Bank to equip them to make them more efficient and more responsive to the need of the workers. As at today the board and management of Federal Mortgage Bank are not reporting to the workers. They are reporting to people who sit down and appoint them. And those people have only four year term. For an organisation that is supposed to be involved in project that have long period they are being run by people who have short tenures and therefore the key man dislocations in policies and decisions have been one of the ills bedeviling Federal Mortgage Bank. So we needed to look at that. That is one of the things we believe that Mr President should be able to look at so that we would be able to have a Federal Mortgage Bank that is being oversighted by the people who are contributing and be able to decide on how effective to deploy the resources that they are contributing. So the issue of EDL, NHF will be a fallout of that process. They can now be able to have a more insightful understanding of the operations of those things. Today the Association of Housing Corporation of Nigeria, may have their point to make but then when that engagement is done, all parties will sit down and see all aspects to it and find out what has happened, what should happen, and what is wrong in each of those policies. A very good policy, well intention. It is the operation and operationalising of it and its linkage to the mortgages that we need to see how we can improve upon the process.
Although you are no longer at the saddle. Give stakeholders an idea of what the leadership of REDAN is doing to help the Federal Mortgage of Nigeria recover the over N48 billion Estate Development Loan owed by over 200 members of the association.
I am not sure the statistics is correct. But whether it is correct or not, the reality on ground is that there are bad loans. The first thing that we have done and we are planning to do now is to find out what caused them to go bad. And we have discovered that in some cases actual problem is not with the developer. We have had situations whereby a developer is working and all of a sudden a community comes in and claim a land that was given to them by the government and some of the houses were burnt. Some of the houses were demolished. It goes to talk to land disputes. In some other instances, some of the mortgage banks that are handling some of these projects folded up and things went bad. In some other issues because of a hostile government who felt that the developers belong to a different party the project site was stopped and unimaginable conditions were given for it’s opening. In some other cases, the problem came from the Federal Mortgage Bank. They did not give the money when they are supposed to give it. In some other cases, it came as a result of inflation because the fundamentals upon which the loan was given has been overtaken by time and otter factors. The transaction time of Federal Mortgage Bank is very long, it is very bureaucratic and therefore by the time a bill of quantity is prepared and brought to Federal Mortgage Bank in between the time it is required and the time it is approved it may take one year and if we had that the inflation element in Nigeria is 20 percent that means that if the man put in a profit that exceeded they should put which is 15 per cent and there has been increase in the input materials by 20 percent as a result of inflation that means the man will look for 5 percent to even finish the estate not to talk of profit at all. So we have to sit down, instead of criticising, to look at how can we sit down find solutions to some of these challenges. If we do not do that, we will continue to run a commentary on something we should participate in and that is not healthy.
The 2023 general elections are over and a new government has taken over the mantle of leadership of the country. In appointing the minister of housing, land, and urban development, what criteria do you think President Tinubu should look at?
One of the first things to look out for in appointing anybody is integrity. Does the person have integrity? The second area, does the person have passion and proven track record of being a hardworking person? Because the job of being a minister is a very tough one. The third thing is: does he have the experience to distill through the rubbish that will be presented to him everytime by interest parties. There are a lot of Nigerians that are qualified. But unfortunately from what we have seen the criteria for choosing people is not the same thing we are talking about. It is about political patronage. It is about reward mechanism for support. Coincidentally, I am not one of those who are enthused that they are going to make the list, but we pray that he make a good choice. But know what we know over the years I do not think that the sound criteria for choice is what he will use. If it is used, that is our prayer, I will look forward to it. But more important than whoever becomes the minister is the fact that the organised private sector employ 85 percent of Nigerians and we should ask the organised private sector to have more interest in holding government to account in terms of the appointment of the people. Over the years some sectors have been able to do that, notably the medical sector and the legal sector. You cannot appoint a nonlawyer to go and hold sway as the Attorney General and Minister of Justice. Neither can you appoint somebody outside the medical professional to be the Minister of Health. Therefore, we should try as much as possible to look at what the competencies that are required to run efficiently? What are experience? Because it is not supposed to be a learning place. It is supposed to be a practical, implementation place for the minister and he cannot implement what he has never known about. Because he will be surrounded with high wired intellectual professionals who may be speaking above your level of competence and that leads to confusion and sometimes it leads to pride because he does not want to accept that he does not know that these are some of the problems I have seen over this past decade in those ministers.
Stakeholders in the housing sector are calling for the reform of the Land Use Act. Do you think its reform will help boost housing delivery in Nigeria?
There is not much problem in the Land Use Act. What the Land Use Act only says is that the consent of the governor is required to do XYZ, like in title transfer. It also says that the land is domiciled in them. Each of the policies are as a result of what we have allowed the various governors to do. Citizen should be able to arise, especially those who are operators in the sector and say we do not want this policy because those policies that are being negotiated, the land use policies, the land use regulations in the various states are the creation of the state administrators, the governors. They decide what policy to do with the power they have from the constitution. It is not the constitution that told them to be bad policy makers or to issue bad regulations. Therefore when I see people pointing out and making a noise about the Land Use Act being wrong. No. The crux of what we already have between the farmers and herdsmen many of the states will not agree to change the Land Use Act and make it a different thing. So what is required now is for us to sit down as stake holders and ask ourselves what are the areas that the current regulations, the current policies at each state have affected activities? Why should it be the governor alone that will sign the C-of-O in some states? It wastes a lot of time. It takes six months. Others one year. They are not aware that when you are not signing C-of-O, you are not providing collateral for the activities that is supposed to take place in that sector because every activity takes place on land whether it is industrial, whether it is tourism, whether it is market, whether it is residential, they all take place on land. Therefore, when you are encumbering the land administration of your state, you are demarketing your state and you are making your state to be a very terrible area to invest while other states can make their states to be a destination of choice for investors by managing properly the land assets upon which every development hinges upon. So what we needed to do is to do that and that is what one of those things we are trying to do from the Nigeria Real Estate Data Collation and Management Programme. We are saying that any state that is making it difficult for investors to come into their state it will be a risky thing for those investors, especially for development financing institutions to give loans to that state because that development you are going to give loan as a development financing institution is going to take place on land and already we have a huge impediment by way of the Land Use regulation and policy in that particular state and, therefore, there is an urgent need for us to work on that and get it to be resolved.
You have a background in surveying and evaluation. Do you think there is a strong synergy currently between the Nigeria Institute of Surveyors and other relevant bodies in bridging the housing shortage in Nigeria?
There is a difference between professionals who are involved like Nigeria Institute of Surveyors, Nigeria Institute of Quantity Surveyors, architects, engineers, lawyers, etc, who are involved in the real estate sector and the businessmen, the investors. These are two separate areas. REDAN represents the businessmen who are operating there. They may be professionals. But they are investors as a businessman. Both the investors and the professionals are needed. They have roles to play. But I believe that what we have been looking at over this years, like I mentioned concerning the endorsement of products to have them work together to be able to set standard, minimum standard that must be conformed from the experience, from the state of last houses, we now know that we have a lot of work to do with the engineers and the builders to make sure that theses houses do not collapse. These are professional issues. But these are also business issues. So we must make sure that the developers in the business does not cut cost in trying to make sure that the houses are developed and to make sure that the professionals who are supervising those houses they do their job. So it is a collaborative thing that we need have to do to be able to serve better in area that we are called to serve in.
The sit-at-home ‘pseudo’ fears are still crippling the economy of the South-East Zone of Nigeria and housing activities are equally being affected. What is your advice to President Tinubu in steaming the tide of this ugly situation?
It is something that I believe they should sit down and be able to look at the strategy of engagement. There is a feeling that is fueling the agitations, and that feeling ought to be examined. There should be a proactive measure to finding out what needs to be done to manage it on a long term. It has to be a long-term solution. It has to be a long-term perspective on the matter. It is not an emotional response. Meanwhile, we also have to tell non-state actors that on the long run they cannot replace the state, otherwise anarchy will reign. Therefore we have to sit down and ask ourselves. We cannot close down opportunity for people to engage in lawful activities if their businesses in the guise of trying to help them. That is hurting them. That will be driving away businesses from their areas and that is not helpful for the interest which you say you are protecting for them. So there has to be a rethink on the part of all parties to say if the people is actually at the centre of our activities as government, if the people are at the centre of our activities as those who are saying sit down at home, then I think there has to be a refashioning, re-strategising because you do not kill people to help them.
Sunday Ogbu is a professional journalist with eight - twelve years experience that had worked with various print and online media. Sunday specializes in news reporting with the aim of educating his readers on current social, political and economic occurences within his area of coverage. Sunday is a strong force to work with in the media industry and uses his positive attitude and tireless energy to encourage others to work hard and succeed. Sunday is inspired daily by his wife and their four children. In his free time, Sunday likes sight-seeing, reading and discussing issues of societal interest.
