ASSESSMENT OF THE ROLE OF GOVERNMENT AGENCIES IN PUBLIC AND PRIVATE PARTNERSHIP IN HOUSING DELIVERY IN LAGOS STATE

CHAPTER ONE

1.0    INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Housing has been viewed as the process of delivering a large number of residential buildings on a permanent basis, with sufficient physical infrastructure and social amenities, in planned, decent, safe and sanitary neighbourhoods (Ibrahim & Mbamali, 2013). As such, it affects the life of an individual as it provides the space for protection, privacy, economic activities, recreation and livelihood (Ajayi & Omole, 2012).

The introduction of Public Private Partnership in housing in Nigeria started in the early 1990s with the introduction of National Housing Policy (NHP) (Ademuyi, 2010). According to Ukwayi et al., (2012), the poor performance of the National Housing Policy in meeting its set goals and objectives led to a comprehensive review, whereby a new approach to the partnership between the government and private sector in providing housing and infrastructure was initiated in the year 2000.

Public-Private Partnership can be defined as the process of executing projects through a joint venture or agreement between an active private entity of a specific sector of an economy and various parastatals or agencies of the Government, who are responsible for the management of the specific sector being considered. It is usually carried out for large scale projects which are beneficial to the general public and cannot be solely funded by the government of a country. Once completed, the private partner ensures that the capital expended on the project is recouped and if possibly profits are also ensured, but subject to the agreement prior to the completion of the project.

Agencies responsible for housing provision in Lagos and Nigeria as a whole include: The Federal Housing Authority, The Lagos State Development and Property Corporation, The Ministry of Lands, Housing and Urban Development, are a few of the Government agencies responsible for housing and all matters related to housing. Their major functions include the development of housing at a subsidised fee for the general public, the provision of land for housing development by private investors, and the maintenance of all existing basic infrastructure for the public which complements the functions and use of housing and also the provision and enhancement of such basic infrastructure in the near future.

In recent times, the development of cities and its infrastructural needs around the world is achieved by joint efforts of both the government and private individual efforts and initiatives. Nigeria operates a three tier system of government; the federal government, State government and local government, all required to provide affordable and comfortable housing and infrastructure to the people. The delivery of basic utilities and services especially housing, is partly the responsibility of the government, which has been handicapped by financial constraints, political instability and many other issues.

This research will therefore identify and assess the statutory and financial responsibilities of the government and it’s agencies in providing residential properties and other necessary housing facilities, for the social benefit of members of the country while also ensuring that the financial interest of their private partners are guaranteed throughout the life-span of the developmental project.

1.2   STATEMENT OF PROBLEM

The Nigerian government in the past has experienced failures in the course of delivering housing to the citizenry. This has been attributed to a host of problems, some of which are still in existence in the provision of recent housing projects. The problem of management is eminent in Public-Private Partnerships. This entails the responsibility of providing property management services upon the completion of the project. Though prior to the execution of the housing project, it may be agreed that the management of the project upon completion should be handled by the private partner (in order for them to acquire their initial investment and profit), the government may insist on providing such services and eventually fail in both the management of the property and also in recovering the investment of the private partner. Also the end-users may fail In the appropriate management of the subject property seeing as the government has subsidised the cost of housing for them, causing further difficulty in the management of the property.

The norm within the Nigerian housing sector is the continued lack in provision of housing stock. Within Lagos State alone, housing stock is experiencing a deficit of almost 50,000 units (Estate Intel, 2016). This creates a common scenario especially in the semi-urban and urban areas, where a single housing unit accommodates a larger number of occupants than expected, hence increasing the pressure on the already exhausted basic infrastructure within the immediate environment. This in turn is going to lead to certain negative social, and environmental impacts in the society. The lack of housing stock will increase homelessness in the area, decrease in standard of living and a possible increase in crime rate due to the lack of housing accommodation in a subject area.The “urban poor” in the society are those usually affected by the problem of a lack in housing and this occurs at an extreme magnitude as stated earlier in the number of housing units lacking in Lagos State alone.

Another major problem faced by the government and it’s agencies in Public-Private Partnerships is the lack of finance. As stated earlier, majority of the financial resources for a project are provided by the private partner but it should be noted that real estate is a long-term investment and the effect of inflation may erode the value of the initial investment made by the private partner. This in-turn erodes the expected future income of the investment, hence causing both partners to seek additional funds during the course of the project. Oyedele (2013) identified the challenges of the Kuto-Bagana bridge project, which was a PPP venture between the Federal Government, Kogi state, Nasarawa State and private investors. One of the states, Nasarawa paid its counterpart fund of N1billion to the development partner, however other parties could not meet up with their financial commitment.

The problem of mismanagement also poses a threat to the efficient delivery of a housing project. It is common knowledge that one of the major problems in existence in the Nigerian government is corruption and this cuts across all segment of the government, with the housing sector not an exception. A case study of this scenario is evident in the recent construction of the Lagos Ibadan Expressway. Oluwasanmi and Ogidi (2014) stated that the managers of the project; Bicourtney Limited was expected to only coordinate the financial and technical contributions of other partners and not to act as the contractor. This involved arranging for finance and reputable contractors to develop the road. However, this effort failed because Bicourtney could not get a financier, and rather turned itself into a contractor. The Nigerian Federal Government then had to revert to the former contracting system by engaging the services of Messrs Julius Berger Construction, and RCC.

A distinct problem in the form of public-acceptance also exists in the execution of PPP projects. In a scenario where the land being used for the project was previously owned by members of the public (who may belong to the low and middle income class), and such individuals weren’t adequately compensated by the government for compulsory acquisition of their land, then such a project will be hindered by affected members of the public. Such a problem may also be heightened in a situation where the project is aimed at high class members of the society. Also in the event that the project is intended for the poor and is being constructed within a “high-class” location, it is referred to as the NIMBY syndrome, where the high-income individuals in that area kick against the project. The Victoria Island - Epe Express Road project is a perfect example of such situation. The project failed to an extent because the concessioner; Lekki Concession Company (LCC), failed to carry along other stakeholders. Without adequate consultation and approval, LCC wanted to construct three toll gates within a distance of less than 5 kilometres. Concerned Nigerians kicked against the idea and threatened legal actions. The state government was forced to construct alternative roads that leave road users with options, which is in line with United Nation’s rule on PPP (Oluwasanmi & Agidi, 2014).

Various other case studies relating to the implementation of the public-private partnership model exist outside Nigeria. In Mexico, the Ejido-Public-Private Partnership programme was verified to be far from successful (Jones & Pisa, 2010). The authors indicated that by early 2012, only eight out of 1122 “ejidos” (co-operative farms) adjoining Mexico’s largest cities had established partnership schemes in 12 projects. Reasons for this incorporated bureaucratic inadequacies and delays in surrendering land titles, deficiency of capital in the agricultural sector and supremacy of the policies by the private sector to the elimination of farmers leading to loss of control over their land and the project without adequate financial compensation. As a result, the Mexican government took steps to conquer these problems with fast footpath legal title stipulation and proposals for new lines of finance for agricultural development through a national fund. In the event of stipulation of public finance, the government would become a formal partner in the project until such time, the “ejidos” will contribute serviced land (Jones and Pisa, 2000).

In some scenarios, non-profit organisations may even be involved in providing housing for the public through the public-private partnership model. According to Wayne (2011), seven states in the United States of America have developed trust funds for affordable housing, ranging from $10–50 million. These funds are awarded to local community developers to build and manage low and moderate-income housing. The Rio Tower project, a housing facility for the elderly poor, in the Little Havana district of Miami was built with Florida’s trust fund money. The non-profit East Havana Community Development Corporation built and now manages the facility. Non-profit housing coalitions in various states have been able to use the local infusion of trust fund
money to leverage additional revenue from local realtors and homebuilders in the form of real estate transfer fees (Wayne, 2011)

There are a variety of problems faced by all parties in the execution of a housing project, the aforementioned problems can be termed as the most common and vital problems encountered during the provision of housing, using the Public-Private Partnership model.

1.3   RESEARCH QUESTIONS

This research answers the following questions as regards the analysis of data and eventual conclusion attained:

1.      What are the various housing projects in Lagos State?

2.      What is the success rate of the past housing projects in Lagos state delivered through the PPP model?

3.      What are the challenges faced by the PPP model in the delivery of housing in Lagos State?

4.      What are the likely remedies that could be recommended for effective housing delivery through the PPP model?

1.4    AIM AND OBJECTIVES

The aim of this research is to examine the level of participation of government and it’s relevant agencies in housing delivery through Public-Private Partnership, with a view to improving the housing stock in Lagos State:

1.      To ascertain the various housing projects in Lagos State?

2.      To determine the success rate of the past housing projects in Lagos state delivered through the PPP model?

3.      To identify the challenges faced by the PPP model in the delivery of housing in Lagos State?

4.      To proffer likely remedies that could be recommended for effective housing delivery through the PPP model?

1.5   SCOPE OF STUDY

This research covers aspects of real estate such as the need for housing, the use and importance of public-private partnership method in providing physical infrastructure in general, and also the activities government carries out when providing physical infrastructure using the Public-Private Partnership method.

In terms of geographical location, this study is limited to Lagos State (more specifically Ikeja area where most governmental agencies are located) so as to ease data collection and ensure accuracy of results during analysis.Also, government agencies such as the Lagos State Ministry of Works and Housing, the Lagos State Ministry of Lands and Urban development, the Real Estate Developers Association of Nigeria, the Lagos State Ministry of Housing and individual/organisations that are considered private developers, are regarded as bodies to be assessed during the course of this study.

1.6   SIGNIFICANCE OF THE STUDY

This study is very relevant to various individuals and organisations in major sectors of the economy. In the private sector, investors can utilise this research to ascertain the benefits and shortcomings of involving government agencies when carrying out a project. This will help such investors make vital decisions as regards involving the government in real estate developments or not.

In the public sector, the government can use this research to review their current roles and level of involvement in Public-Private Partnership projects and then come up with modern and more effective functions and policies which they can execute, when involved in Public-Private Partnerships. Such government agencies which can benefit from this research include the Ministry of Housing, Ministry of Finance, The Federal Housing Authority, The Federal Mortgage Bank of Nigeria, and the Real Estate Developers Association of Nigeria.

In the educational sector, researchers can utilise the data and results of this study to carry out further research in relevant fields such as housing, real estate finance and management, infrastructural economics, etc.

1.7   LIMITATIONS OF THE STUDY

In carrying out this research, limitations such as time constraint and financial resources affected the results of this research. The time constraint entails the researcher’s need to attend classes and the financial constraint entails the researchers need to print research journals relevant to this research and also printing out drafts of the project for reviews by the assigned supervisor.

1.8   DEFINITION OF TERMS

Public-Private Partnership: This is a relationship between any arm of government and a private individual or organisation, with the purpose of providing a project for the benefit of all parties involved.

Government-agencies: Any extension of the government which can act independently for the benefit of the government and the general public.

Housing-delivery: This refers to the total units of houses that are currently in existence and that are also currently being constructed.

NIMBY: An acronym that stands for “Not In My Backyard”. Refers to a neighbouring gated communities stand against the construction of a project within/around the neighbourhood.