Babatunde Fashola, Minister of Power, Works and Housing: Interview

Interview: Babatunde Fashola

How would you assess the progress Nigeria has made in addressing the housing deficit?

BABATUNDE FASHOLA: While the housing deficit is a problem that mainly afflicts urban centres like Abuja, Lagos and Kano, as a result of migration there are empty houses in both rural and urban areas. But they do not meet the needs of most buyers. This has led to the government’s decision to develop a pilot housing project that is currently running in 34 states, responding to different buyer needs, financial capabilities and cultural attitudes to housing, as well as the different categories of land.

We are now at the infrastructure stage, and many of the houses are already finished. We are building roads within and between cities in every state in the country, increasing access and connectivity.

What action can be taken to make more funds available for mortgage loans?

FASHOLA: It is very tempting to see financing as the main problem of the housing sector. However, we believe that we should focus on a well implemented programme, and financing will follow closely. The government’s pilot projects will show what the financing costs and expected receivables are. Only when banks see the viability of these projects will they become interested in financing loans.

If our pilot project passes checks for affordability and acceptability, we will invite the private sector to step in. Public servants contribute to the national housing fund and become eligible to apply for loans from the Federal Mortgage Bank of Nigeria (FMBN). We have approved some policy recommendations made by the FMBN. Among these is a reduction from 10% to zero the equity contribution of small-scale borrowers of up to N5m ($16,200). There was also a reduction from 15% to 10% for medium-scale borrowers. In short, the overall goal in this area is to increase access to and the availability of financing.

In what ways can access to power be improved?

FASHOLA: Since 2015 the government has increased available capacity from 4000 MW to 7000 MW, and in 2018 we will add a further 950 MW. We do not anticipate that trend slowing down in 2019. The first fully privately funded power plant recently went online. Regulations have opened up the market for people to supply meters and thus bridge the metering gap. There are opportunities for increasing and deepening access for people who are not ordinarily connected to the grid. New regulations support the evolution of independent mini-grids of up to 100 KW, even without a licence, which are targeted at small consumers. The Eligible Customer Policy, which addresses access and quality, is targeted at industries and small and medium-sized enterprises that don’t have the quality or quantity of energy they need. Contracts are being made directly between consumers and generators where distribution companies don’t provide any service at all. We have had positive feedback – companies are reporting that their energy is more stable and better supporting their production cycles.

How do you anticipate Nigeria’s energy mix developing over the long term?

FASHOLA: We are focusing on using solar, wind and biomass to generate energy. We have committed to an increased renewable component of our total energy output by 2030. We need to stay focused on what is efficient for us, such as hydropower plants along our major rivers. The government is also monitoring the rate of deployment of solar panels in homes, banks and petrol stations. The spread of solar power is encouraging with more and more individuals and companies embracing it. We are collecting data on the scope of this trend in order to maximise the effectiveness of our energy mix, as well as the deployment of our gas capacities.