Expert outlines how Real Estate, Construction sector can drive economic recovery plan
Nigeria’s current gradual economic recovery process can be accelerated, if the country refocuses its attention on viable sectors such as Real Estate and Construction, which have the potential to create jobs, increase spending and return investors’ confidence in the economy; Damola Akindolire, Executive Director, Real Estate Development, Alpha Mead has revealed.
Akindolire is confident that as the second highest employer of labour, the construction industry holds the potential to lift the country out of its current economic status, if the government provides the enabling environment for private operators in this space to thrive.
Nigeria’s seven-month old recessed economy is beginning to show signs of a possible recovery, especially the recently released Economic Recovery Plan (ERP) the Federal Government and the on-going CBN strategy to close the gap between within the foreign exchange market.
Speaking recently in Lagos, Akindolire said one of the ways for government to harness the potentials of Real Estate to boost its ERP is the effective utilization of the Sovereign Wealth Fund (SWF) for critical infrastructure development such as housing.
According to him, the fund, which is in excess of N500 million could play a key role in bridging the country’s current housing deficit and upscale existing critical infrastructure stock such as road, power and rail.
“We should give this serious attention because buying bonds and other financial instruments are good for the long term, but may not be able to provide the short term wins, which we desperately need to get our economy out of the situation”.
Explaining further, Akindolire, whose company is currently leading the use of modular technology to respond to Nigeria’s housing deficit also noted that amongst other ways, the prompt release of the required guidelines for Pension fund investment in Real Estate assets, which will dovetail to the mortgage sector industry estimated at $35bn, is also essential for increasing activities in the Real Estate sector.
Explaining that this will attract capital investment, drive growth for mortgage-backed securities and deepen the capital markets.
Speaking further, Akindolire also noted that in the face of the current cash crunch, government can boost its Internally Generated Revenue (IGR) by implementing an effective Land Title Regularization and Insurance system. “Setting up an efficient one-stop-shop to regularize Land titles within 30 days and adopting title insurance to provide the necessary comfort within this period will increase the volume of transactions and in turn, increase the IGR of State governments,” he said; explaining that this will also deepen the insurance industry and its contribution to Nigeria’s Gross Domestic Product (GDP) and job creation. A close look at the 2017 budget shows the Federal Government will be investing as much as N100 billion on building Office towers for MDA’s, this trend Akindolire says is clearly not a sustainable approach to development, adding that assets such as Office development for MDAs should be advertised to the general public for purchase, to stimulate the Real estate sector.
“Alternatively, these assets can be listed through a REITs product to attract foreign investments,” the Real Estate expert advised, listing the immediate benefits to include; more resource for the Federal Government to execute social projects and focus on infrastructure, long term preservation of these assets, growth of new service sectors such as Facility Management (which is currently one of the largest employer in the UK and constitute 5 percent of the United Kingdom’s GDP), better efficiency in space use.