Though public-private partnerships have existed throughout history, the past few decades have really seen an increase in their popularity. This is mainly because many governments increasingly see the advantages of combining the best of both worlds – the public and private sector each have their place in the development of any country. And it is even better when the two sides coordinate their activities to grow the economy in a way that provides long term benefits to all of society.
It is with these goals in mind that the Ministry of Finance set the ball rolling on the Family Homes Fund project. Family Homes Fund (FHF or the ‘Fund’) aims to use this method that combines the best of both worlds to create a major impact on the access to financing for housing for everyday Nigerians. The focus is on providing access to housing for home ownership rather than for rent or lease. It is a government-initiated financing initiative powered by the private sector which is slated to deliver a target of 100,000 houses in 2017. This number is to increase to 400,000 annually after the first 3 years of the Fund’s operation i.e. by 2020. This will be done by raising a fund of 1 trillion naira from local, international, public and private sources.
As with all public-private partnerships (PPP), the ‘Fund’ is a consortium of both public agencies/ministries and private investors. The Ministry of Finance remains the instigator of the project while public agencies such as the Nigerian Mortgage Refinancing Company (NMRC) and the Nigerian Sovereign Investment Authority (NSIA) provide knowledge and networks related to their fields of specialisation. Private investors are continually added to the program and will increase the fund’s base as the program increases its impact and client base. The fund also works with organisations like Millard Fuller – an existing housing organisation which has successfully completed the 400 unit GrandLuvu low income estate project in Masaka amongst other projects – to incorporate as many successful models as possible into planning the FHF program.
The ingredients are in place to make this program successful in a country like Nigeria that has great potential for attracting investment. However, the program could still be a hit or miss depending on how effectively the benefits of such a scheme for investors, developers and home buyers is communicated and tailored to each audience. Efforts to ensure that the needed participants are duly informed and incentivized to take part are ongoing. For instance, in addition to depending on funding from individual & business investors, the program also keys into funds available from pension and insurance funds. These funds are held by companies with a mandate to invest client’s money in profitable ventures. By showing that investing in FHF is a profitable exercise that yields dividends for clients, more private investors are encouraged to buy into the program.
Private housing developers will also be a part of the PPP puzzle as the government accepts proposals from these private businesses to develop housing under the umbrella of the Family Homes Fund program and will benefit from the government through low interest rates of 18% on loans from the ‘Fund’, access to land that has been designated by state governments for the scheme. This eliminates the problems of illegal sales and lengthy processing that usually blight the acquisition of land in Nigeria. In addition, developers will also benefit from lower bulk pricing as goods and services are centrally procured for FHF developments.
The government, in turn, gains from the partnership by furthering its policies for the good of the nation. This includes enforcing strong local content guidelines to support the construction industry supply chain in the country, setting price ranges for housing to ensure that developers do not charge exorbitant prices and overseeing the quality of housing provided for more durable Nigerian homes. In many ways, this is definitely a win-win for everybody.