Dyed Jeans Makes Me Run

February 13, 2017

As soon as I arrived our Miami apartment my wife told me about the Hugo Boss shop at the Dadeland Mall around. Let me confess, I love Hugo Boss jeans. An acquired obsession I guess. There is something about the regular fit 36/34 size, black or navy blue, it’s cut and smug fitness that gives me a transcendental sense of accomplishment. I barely unpacked my stuff and dashed down to the mall to get two new pairs (I already had four…actually, that’s a lie, six pairs) and discarded the trousers I had on. Something I could ill afford in my undergraduate days.

I recall a dissimilar shopping experience.

Alighting from the oven hot campus shuttle at Yaba and stepping into the scorching midday Lagos sun, I could hardly keep my eyes open. Three non-stop days of demon inflicted sleep deprivation had led to rheumy and smarting eyes…extreme fatigue. What had started off as respite and territorial expansion had turned into a veritable nightmare.

It was shortly after one of the many “IBB Must Go” student demonstrations. The University of Lagos school authorities had shut down the University Campus indefinitely, ordering students to vacate their hostel accommodations “with immediate effect”. Not that vacating the hostel actually affected me for I did not secure a bed-space, something that could set one back tens of thousands of naira, the type of funds I didn’t have at the time. On resumption, after spending almost six months at home doing nothing, the Non Academic Staff Union of Universities commenced an indefinite strike of their own, to press for better conditions they said. There was no one to handle clerical and administrative work, no one to ensure that the utilities worked, open and manage the hostels. Bad luck you will say, heaven sent for some of us, or so we thought.

I think it was Daches that first advocated we ‘colonize’ one of the erstwhile locked hostel rooms. The idea wasn’t original as we were to find out later. By the time we arrived Makama Bida Hall, almost all the rooms had been ‘colonized’ by likeminded students, some, like us, had arrogated two or three mattresses to themselves, comfort hitherto unknown, even when students occupied the rooms legally.

The room adjacent to ours had been ‘colonized’ by a bearded strange looking ‘Blue Beard-like’ middle-aged post-graduate student. Just as we were about to settle into bed, after a ‘lavish’ Unilag undergraduate meal of fried egg and bread, washed down with a bottle of limca, what initially started as a rattling noise next door became a steady thumping, ‘Dum! Dum! Dum!

“Na wetin dey happen?” was Daches initial reaction. My first thought was ‘abi na poltergeist?’ and not being a very religious bloke, what came to my mind was Father Damien’s chant, “the power of Christ compels you! The power of Christ compels you!” repeated under my breath, hoping not to alarm Daches. This seemed to work for a while until in a true life-like Exorcist fashion Blue Beard started chanting in part-gibberish;

Tokwi no!

Tokwi no!

Tokwi no!

Quickly followed by grunts

Humpkh! Humpkh! ẹjẹ Jesu!

Humpkh! Humpkh! ẹjẹ Jesu!

Humpkh! Humpkh! ẹjẹ Jesu!

In quick succession was the sound of crashing lockers and woodwork and what sounded like the banging of a human head on our common wall. The ‘Tokwi no! Tokwi no! ran through the gamut of the night. Suffice it to say that sleep ‘cleared’ from our eyes. The spare mattresses where ultimately put to better use as ear and head plugs. The usually bold and confident Daches was petrified and neither of us slept a wink that night, nor the three ensuing nights either. I can’t remember if it was Daches or I that suggested we go inspect the room the next morning, but ‘who will bell the cat?’ Such a brave mission was laudable but its reception was halfhearted. I had a strange feeling (which I suspect Daches shared as well) that the walls of Blue Beard’s colonized room would be spattered with blood and brain matter. Mba nu! No! No human body could have endured such a barrage, unless he was not human, a thought we didn’t want to entertain. So we choose to endure, stoically.

On day three, it was bleary-eyed Daches and I that alighted at Yaba bus stop and made a beeline for the bustling Tejuosho market. Daches had a gig, writing and producing music, which earned him a relatively modest income by the side. He had managed to save enough money to buy a secondhand pair of moccasins and who best to accompany him on such a mission than a secondhand ‘bend-down-boutique’ expert like me. My pedigree was never in doubt having managed to remain a ‘guy’ by establishing contacts in all the bend-down-boutique Okirika markets in Lagos. Long before the advent of GPS navigation and Google Earth, my sources would furnish me with the location of the latest Grade-One ‘bale’ of Okirika even as it snaked its way down from Cotonou in Benin Republic, sometimes berthing at the then remote Alagbado Bend-Down-Boutique market before arriving Tejusho. My strategic importance increased several notches when it was known that I regularly escorted deserving friends shopping, helping them navigate the famous Badagry Bend-down-boutique market. That was my pedigree, but my specialty, my core competence, was shopping for jeans.

In case you don’t know, there is an art to buying secondhand Bend-down-boutique jeans. The trick is to discern durability, buy jeans that are sufficiently resilient such that no matter how much they fade, you can take it back to the market and for a token, dye it back to its original colour, or any colour of your choice for that matter. Errmm, okay, I lied, not exactly to its original colour, more like what could pass for its original colour, as after a while (probably the third or fourth re-dye), the jeans takes on a variegated hue, some patches much darker than the rest of the fabric.

Shopping for Okirika without an experienced chaperone can be quite confusing, the cacophony of chants as traders compete for customers, “Fine gal we get correct painti here’, ‘Nna I choro Chinos ka obu Corduroy?’, ‘Do you need Chinos or Corduroy?’ The choices are infinite, sufficient to confuse even the most discerning…but not a veteran like me.

Daches, being a novice almost stopped by the stall of a grade three Okirika merchant until I held him by the elbow and firmly steered him away (by the way, never, never, ever buy grade 3 Okirika, you hear me? They fall apart on the first wash, the deceptive layers of starch holding the fabric together dissolving to reveal a threadbare fabric. I don warn you oh!). Stall is actually dignifying the cellophane sheets with merchandise strewn all over, laid over the Nigerian Railway Corporation rail track. Traders will intermittently (almost in a choreographed manner), dart to the side like the parting of the Red Sea, on the approach of a train, only to fuse back in a mass of humanity, fabric and cellophane, as soon as the train leaves the station.

My friend’s love for music must have attracted him to this particular trader’s chant amidst the cacophony. Sweating profusely, and intermittently ringing a bell to the rhythm of his chant, he belted out a melodious tune;

Painti!

Ten Ten Naira!

Ten Ten Naira oh!

Na ya sizei!

Ten Ten Naira oh!

Ten Ten Naira!

But then we were on a mission, so I coaxed Daches towards the secondhand shoes section, a completely different world. I was transfixed at the very first stall. I could swear that what was before my eyes was one of Michael Jackson’s shoes. You know the one he wore in the ‘Beat It’, no, ‘Billie Jean’ video? Yes the black tipped white one. I was further sold on the idea when I realized that the trader was chanting ‘Oga Tininini Tininini! Tininini Tininini’ while holding the pair aloft. I almost fell for it but the choice was not mine, Daches wanted a pair of moccasins, so moccasins we sought.

Oga Billie Jean showed us the left foot of a beautiful black and grey moccasin on display and Daches’ eyes lit up. Chai! Error! Never, ever, ever let an Okirika trader know that you like a particular item, you hear me? Never!! The modus operandi, after you have spotted the item you want, is to create a diversion. Concentrate on an item you don’t want, hum and haw, wear the trader down with haggling, reducing your bargaining price each time he acquiesces to your latest position. Only after you have done this four or five times should you reluctantly concede (with a shrug and a hiss preferably), “This ya market too cost oh! Abi you no get am for pink (or any other unavailable) colour? This other wan nko? How mush?”

There!

You have a ready-made bargain!

Unfortunately Blue Beard’s ‘Tokwi No’ antics had taken its toll so neither Daches nor I were in the mood for extended haggling. Surprisingly we somehow managed a bargain price and the trader (almost too enthusiastically) carefully wrapped and shoved the pair of shoes into a nylon bag.

We trekked the short distance to the campus shuttle queue and had barely stood in line for a minute when the erstwhile bright sky erupted its bowels in scalding rain. Rain? Did I mention that the problem with dyed jeans is that it abhors rain? A minute under the slightest shower can lead to total embarrassment, a puddle of dyed water gathering around you, staining your underpants, your body and any article of clothing, in fact anything that makes contact with you. The only panacea is…well, to run. Run as fast as your legs can carry you. Run until you get to the nearest shade and sanctuary. So I ran, ran as fast as I could. Poor bewildered Daches had no idea what was pursuing me, so he ran as well, at some point overtaking me. Huffing and puffing and in-between breaths asking, ‘Bros wetin dey happen? Who dey pursue us?’ It was only when we got to Oga Billie Jean’s shop that he stopped. The wrapped pair of moccasins had come undone and that was when we noticed that the right foot of the shoe had a tear along its seams. His barefaced lie response of ‘You don go tear am!’ elicited a wildcat response from Daches. It took all my strength and that of traders in the neighboring stalls to keep him from tearing off Oga Billie Jean’s head. The ruffled Oga Billie Jean promptly gave us a replacement, the ‘Tininini tininini’ exquisite Billie Jean’s shoes.

As I stepped out of the Hugo Boss shop into the Miami midday sun, it began to drizzle and my phone rang. It was Daches. The now very successful Daches (‘side gig’ eventually became ‘main gig’) had arrived Boston to close a Record Label deal. I don’t know if it was the rain or his voice that triggered the irrational reaction but I began to run. I ran as fast as my legs could carry me.

Now I realize that maybe, just maybe it is the thought of being caught under the rain in dyed jeans that makes me run.

I am still running.

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The World Bank’s Ease of Doing Business Report 2017 was published on October 25th 2016 and Nigeria’s ranking improved by a step, from 170 in the 2016 report to 169 in the 2017 (note that the data reflects the situation as of June 1 of the respective year of publication. Previously published data points may be revised as new information is available).
This year’s report finds “that entrepreneurs in 137 economies saw improvements in their local regulatory framework last year. Between June 2015 and June 2016, the report, which measures 190 economies worldwide, documented 283 business reforms. Reforms reducing the complexity and cost of regulatory processes in the area of starting a business were the most common in 2015/16, as in the previous year. The next most common reforms were in the areas of paying taxes, getting credit and trading across borders. Brunei Darussalam, Kazakhstan, Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan, the United Arab Emirates, and Bahrain were the most improved economies in 2015/16 in areas tracked by Doing Business. Together, these 10 top improvers implemented 48 regulatory reforms making it easier to do business.
In the 2017 ranking, Nigeria improved by 0.61% ‘Distance To Frontier’ (DTF) points, from 44.02% in 2016 to 44.63% in 2017. This is the crux of the matter. The source of our economic woes. The reason why the exchange rate is dancing shoki and inflation is drinking paraga. How can we promote export / agriculture / local manufacturing / SMEs if it remains very difficult to do business in Nigeria, if SMEs in some States are asphyxiated with 53 different taxes and rates that are completely in dissonance with the recommendations of the Joint Tax Board (JTB)?
And don’t be deceived by the apparent marginal improvement in ranking for this was driven mainly by a significant improvement in ‘Getting Credit’ (which is purely private sector driven) from 60th position in 2016 to 44th position in 2017, and a slight improvement in ‘Getting Electricity’ from 182nd position – 29.38% DTF points – in the world in 2016 to 180th position – 29.43% points in 2017, a 0.05% point improvement.
There was a deterioration in Ease of Paying Taxes from 28.46% in 2016 to 28.09% in 2017 though not enough to change the ranking which remained the same at 182.
Nigeria also witnessed marginal improvement in some other areas like ‘Getting Construction Permit’, ‘Starting a Business’’, ‘Resolving Insolvency’, but not enough to avoid a deterioration in ranking implying that other countries achieved better improvement. Other areas where no improvement was achieved either witnessed a deterioration in ranking or remained stagnant. One area of note is ‘Trading Across Borders’ where we maintained our 181 ranking (19.93% DTF points remained unchanged) but evease-of-doing-businesseryday we are suffused with Government propaganda that claims that we are encouraging export.
Yet in May 2016 President Buhari commissioned a charged with improving Nigeria’s Ease of Doing Business and subsequently set up an inter-ministerial committee, comprising ministries of Interior, Foreign Affairs and Trade and Investment to “immediately address all challenges inhibiting foreign investment in Nigeria” and improve Nigeria’s ranking by 69 steps to at least 100 position. I even hear that there was a proposed trip to Rwanda (ranked 56th in 2017, an improvement from 59th in 2016, 69.81 versus 68.63% in 2016) to understudy how that country improved its Ease of Doing Business ranking….nothing has since been heard about this excursion.
So after all the fanfare, our ranking did not move an inch…still 169th in the world, though performance marginally improved by 0.61% points. Lets hope that when the points are adjusted by June 2017, the work of the Presidential Business Environment Council and the powerful inter-ministerial committee will have yielded dividends…the target is to move up on the rankings by 69 steps, right?.
Well done!
http://www.doingbusiness.org/data/exploreeconomies/nigeria/

2002: The Dream – The Scraping, Saving and Purchase

Oga Samankwe was one of the lucky ones. He had a decent job in the banking sector, finally managed to get married, bought a brand-new-Tokunbo Toyota Camry and lived in a rented apartment in a middle-income neighbourhood of Port Harcourt, Rivers State.

Oga Samankwe had finally ‘made it’, now officially a member of the elite 11% of emergent middle class Nigerians out of a 168 million population. This exclusive coterie had only just began to grow after the middle class mass extinction economic event of the mid 1980’s that left Nigeria with just the rich and the very poor.

But there was a problem.

‘Making it’ into the exclusive Nigerian middle class. As an Igbo man, especially an Igbo man from Oraukwu in Anambra state, Samankwe could not consider himself a real man, until he built a house of his own. One first in Port Harcourt where he lived and the second, following the age-old Igbo principle of ‘aku-lue-uno’, that wealth not evident in your hometown is wasted, will be a nice ‘white-house’ in his village in Oraukwu.

Osodieli his loving wife completely agreed with him. In fact she was the one that constantly reminded her of Oliver De Coque’s song in which he admonished that a tenant has no business beautifying and cultivating flowers in a Landlords house as he cannot uproot the flowers and leave at the time of eviction. In fact anything Samankwe indicated that he was struggling with saving up for ‘our project’ (for a major project it was) it was this famous track by Oliver De Coque that he will meet on repeat when he arrives home from work in the evening; as Osodieli sets out his dinner and runs his bath; and even as they both tuck themselves into bed at night.

So Osodieli’s message was quite clear, and Samankwe did not have the stomach to argue.

So they saved, and scraped.

Scraped and saved.

Saved and scraped until finally, in 2003 when they heard that  2 plots of native-land was available for sale in Rumuodomaya, a suburb of Port Harcourt, they withdrew their entire savings of N2 Million  to pay for and erect a perimeter fence around the land.

For their purchase, they got a Deed of Conveyance in return.

Now, a typical Deed of Conveyance is a document that evidences the history of how the land has reached the present owner till date and relates all the information in respect of the true owners of the land before it was passed to the current owner. Unfortunately, by the laws of Nigeria, specifically the Land Use Act Chapter 202 Laws of the Federation of Nigeria 1990, as enshrined in Section 315 (subsection 5d) of the Constitution of the Federal Republic of Nigeria 1999, “subject to the provisions of this Act, all land comprised in the territory of each State in the Federation are hereby vested in the Governor of that State and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provisions of this Act”.

Ohoo!

So by the Land Use Act, the seller of the Land cannot transfer title to Samankwe.

See gbege!

2003: The Land – Title, Right of Occupancy, and Consent

Section 9 of the Land Use Act (subsection 1) states as follows;;

(1)        It shall be lawful for the Governor–

(a)       when granting a statutory right of occupancy to any personal or

(b)       when any person is in occupation of land under a customary right of occupancy and applies in the prescribed manner; or

(c)        when any person is entitled to a statutory right of occupancy, to issue a certificate under his hand in evidence of such right of occupancy.

The law also prescribes the name of such a certificate in Section 2;

(2)        Such certificate shall be termed a certificate of occupancy and there shall be paid therefore by the person in whose name it is issued, such fee (if any) as may be prescribed.

So Samankwe being a law abiding citizen quickly reviews the process for  registering the title, and seeking the Governor’s consent  and the issuance of the much sought after Certificate of Occupancy popularly referred to as a ‘C of O’.

Why is this important?

Well because as we have already noted, the ‘C of O’ evidences title but more importantly, a ‘C of O’ means that Samankwe can use his land as collateral to secure a loan for Osodieli’s business or even use the land to first secure construction finance for his dream home and then refinance the construction finance with a long term mortgage. No bank will afford him such facilities based on a Deed of Conveyance.

You will think that this should be easy, right?

Not in Nigeria.

Unfortunately the process of getting the Governor’s Consent and the requisite C of O can take any time between 1 to 15 years depending on the State of the federation. Stories abound of heaps and heaps of C of O requests stacked at the various State Governors’ Offices. In fact it is quite normal for the agent / lawyer processing the C of O to seek its withdrawal on a number of occasions to change the name of the assenting Governor given the expiration of the Governor’s tenor in Office.

So that you do not hold your breath to the point of asphyxiation, Samankwe was eventually issued a C of O.

In 2011.

After 8 years.

He was one of the lucky ones. His request passed through both Governors Peter Odilli, Governors Celestine Omehia and was eventually approved during the tenor of Governor Rotimi Amaechi.

8 years!

In that 8 years the piece of land was a non-earning asset, trapped equity and not fit to serve as collateral for a bank loan of any nature.

2003: Winch-People and the Barbarians at the Gates – Construction Finance and Chief Oti-Okpo

But Nigerians are innovative. Because of this inordinate delay in issuance of rights of occupancy, Samankwe and his ilk rely on what has become the housing finance model of necessity in Nigeria and parts of West Africa, the ‘Stepped Self-Finance’ model. Houses are built in fits and starts, as the prospective home owner raises savings, over an extended period to build, until his savings are exhausted.

So you hear things like, “I don reach foundation level” or “DPC (Damp Proof Course) / Lintel level”. If the target home is a storey building or more then the home owner’s savings may run out  at ‘Decking’ Level after which he will cover the staircase access with a roofed small hut that has come to be known as an ‘I don tire’, an euphemism for exhausted savings. The ‘I don tire’ protects the staircase opening (and by extension, the completed lower floor) from the elements, particularly the rains, pending when the home owner saves up enough money for the second phase of the project.

This process can take anywhere between 1 to 20 years. In fact several of such structures have been completed by descendants. A civil servant father starts the building’s lower floor with savings over a span of a decade then caps it with an ‘I don tire’ upon retirement from the civil service. The son picks up the mantle upon completion of education and securing a job, and finally finishes the first floor and roofs the building. In some instances the plastering and painting of the building is left to the third generation of the family….but I digress.

So Samankwe confirmed from his lawyer the taxes and rates due to the Local Government Council as well as the State Government for Building and associated Permits. Armed with this information and the knowledge that both the Local Government and the State maintained revenue collections accounts at the bank in which we worked, he secured a personal loan and the credited the taxes into the their respective accounts with his bank.

Error!

The very next day after he commenced erecting a perimeter fence, he received a visit from a band of thugs, Chief Oti-Okpo’s enforcers. Apparently Chief Oti-Okpo serves as an authorised revenue collection agent for both the State and Local Government and is entitled to 30% of all taxes and revenues. Two receipts are issued for such payments; one for Chief’s 30% and another for Government’s 60%. Chief Oti-Okpo’s thugs descended on Samankwe’s project engineers and construction workers when they learnt that he paid ‘their money’ directly to Government. Following a couple of calls to people who matter, Samankwe secured audience with Chief Oti-Okpo and later in the evening meets him holding court in an expansive compound.

Chief Oti-Okpo explains calmly that Government cannot defraud him of his entitlement and only concedes to allow the construction if Samankwe pays another 30% directly to him. Samankwe angrily calls the Local Government Chairman and Chief Oti-Okpo screams in the background that if the Chairman has a prick dangling between his legs, then he should attempt not to give him his due.

Silence.Both on Samankwe’s end and Local Government Chairman’s end.

Then Local Government Chairman claims he is dashing into a meeting and switches off his phone. With ‘humbility’ and his tail between his legs, Oga Samankwe pays Chief Oti-Okpo his 30% and secures respite for his project.

By the way, ‘humbility’ is the act of eating humble pie with humility that the average Nigerian is used to.

No power? We accept with humbility. No potable water? No security? We accept with Humbility. No….I’m sure you get the drift.

But I digress.

So work on site continues to the foundation level. Savings are exhausted. Samankwe rests.

‘I don tire’.

2003: Village Fraudsters and the Law- Litigation

It turns out that Samankwe may not own the land after all. Notice of a Court action was posted on his gate. It appears that the person who sold the land to him may have sold to some other parties while the person’s brothers and cousins may also have sold the same property to other parties. All the sellers are from the same extended family.

This is evidently a family business model.

Samankwe takes another personal loan to hire a lawyer and initiates discussions to settle the case amicably and out of court. It is very important to him as all his life savings and borrowings (including that of Osodieli) are tied in that piece of land and the building foundation therein.

Samankwe settles the case out of court. Borrows money from a relative to pay for the land a second time, proceeds of which is used by the selling family to settle the defrauded litigants.

2004: Gbese and Loan Repayment

Samankwe is still repaying all the money he borrowed for tax payments to Government and Chief Oti-Okpo and for both the first and second purchase of the same piece of land.

2005 – Samankwe is still repaying gbese.

2006 – Still repaying gbese!

2007 – Still repaying gbese!

2008 – Samankwe finally retires all borrowed funds and commences saving again.

2009 – Savings and borrowings enables house to be build up to ‘Decking’ level. Savings and borrowings exhausted. Samankwe caps it with …you guessed right!

‘I don tire’.

2010 – Still repaying the borrowed funds

2011 – Savings and short term borrowings enables Samankwe complete the first floor, roof, finish the house and move in. But monthly principal and interest repayments on the short term borrowings is crowding out all other needs of the family. Both Samankwe and Osodieli are now very irritable. No romance without finance.

2011 – Governor’s consent is finally received and Certificate of Occupancy issued.

Hurray!!!!

Hallelu!

Halleluia

Na Christ emerigo ekwensu!

2012: Long Term Mortgage Finance

To ease the pressure on his cashflows, Samankwe approaches a commercial bank for a mortgage loan. Documents are processed and credit risk assessed. Loan is approved. However Section 22 of the Land Use Act 1990 states as follows;

“It shall not be lawful for the holder of a statutory right of occupancy granted by the Governor to alienate his right of occupancy or any part thereof  by assignment, mortgage, transfer of possession, sublease or otherwise howsoever without the consent of the Governor first had and obtained”

So Samankwe pays the requisite charges and taxes and the bank sends the documentation for Governor’s Consent. The additional Charges and Taxes are built into the value of the Mortgage granted to Samankwe. Interestingly, if the commercial bank intends to securitize it’s Mortgage Book (which includes Samankwe’s Mortgage) to liquefy the book and write more mortgages, then Section 22 of the Land Use Act still applies. The documents are sent for Governor’s consent again, though as  part of a batch.

The additional Charges and Taxes passed on to the home owner.

Now this is the typical housing finance structure deployed by an average honest Nigerian civil servant and middle income earner.

Those few that are lucky to access construction or mortgage finance fare better.

Of course our politicians, civil servants who receive kickbacks and all those who have made money from fraudulent endeavours do not build their houses in this manner. For those types, construction is undertaken ‘day and night’ and a spanking new master piece is delivered within a space of 3 to 6 months.

The Moral of My Story Is…

Encapsulated in Samankwe’s story are a few of the challenges facing our housing sector today, ranging from title issues, inadequate scale of delivery, multiple formal and informal taxation (that increases the cost of the housing units), inability to access mortgages and construction finance due to either lack of a clear property and security rights or absence of long term mortgage finance, high cost of mortgages when available, the affordability gap between the cost of building a house and the income of potential home owners etc.

Of course there are a number of other issues plaguing Nigeria’s housing sector not covered in Samankwe’s story but I guess we all get the drift.

In all developed societies, wherever there is an Affordability Gap as obtainable in Nigeria, Government has always found an innovative way to intervene and encourage the creation of housing stock, and none, and I repeat NONE of these governments rely on a general increase in household incomes as the means for raising effective housing demand.

Such Affordability Gap interventions range from; the provision of land by Government / Communities; Subsidising consumption; Subsidising supply; Supply creation through Public Private Partnerships and Private Finance Initiatives; Separation of ownership from management to protect the assets from problems of mismanagement; and Default prevention through hands-on property management, loan administration and customer care; and Securitization.

Then as a matter of urgency Government needs to streamline and speed up the process of securing Certificates of Occupancies. For instance, why will an investor, particularly a foreign investor, inject US$1 Billion, or even US$1 Million in a housing project when it will take eternity for the underlying title to the property to be transferred?

Exposure without clear property and security rights?

In my early days in banking one of my bosses taught us that ‘In God we trust, everyone else should bring collateral’

Are you God?

The Land Use Act as an Albatross

Our housing finance challenges directly linked to the infamous Land Use Act can be classified under two broad headings; Consent and Revocation.

Consent Provisions (Section 22) of the Act

  • The Land Use Act’s single greatest impediment is that it requires the consent of the State Governor before any legal transaction on land can be consummated.
  • In simplistic terms Section 22 requires that if A wants to sell his plot of land to B, A will have to first seek and obtain the consent of the Governor (to effect a change of title to the land in favour of B), before effecting the sale. Consequently what obtains in practise is that the seller will sign all documents to enable the purchaser obtain the consent of the Governor at the point of sale and therefore transfer the cost, trouble and risk of obtaining the required consent to the buyer.
  • Secondly, State Governments exploit the Consent process to generate revenue leading to a situation where the direct cost of Consent is today a minimum of 15% of the assessed value of the land. Added to the high cost of land this makes land purchase in Nigeria an extremely expensive venture.
  • Thirdly, it takes an inordinate length of time to obtain the Consent even when all conditions have been met. The story of piles of Deed of Conveyances and Assignments awaiting Consent in many states of the federation is common knowledge. This has made the reliance on properties as collateral for loans quite unattractive as the process of perfecting Legal Mortgages is time consuming.

Revocation Provisions (Section 28) of the Act

  • This section gives the State Governors the right to revoke a C of O for ‘overriding public interest’.

The section further explains the conditions for such Revocations in sub section 2 and 3;

(2)     Overriding public interest in the case of a statutory right of occupancy means–.

(a)     the alienation by the occupier by assignment, mortgage, transfer of possession, sublease, or otherwise of any right of occupancy or part thereof contrary to the provisions of this Act or of any regulations made thereunder;

(b)     the requirement of the land by the Government of the State or by a Local Government in the State, in either case for public purposes within the State, or the requirement of the land by the Government of the Federation for public purposes of the Federation;

(c)    the requirement of the land for mining purposes or oil pipelines or for any purpose connected therewith.

(3)     Overriding public interest in the case of a customary right of occupancy means –

(a)     the requirement of the land by the Government of the State or by a Local Government in the State in either case for public purpose within the State, or the requirement of the land by the government of the Federation for public purposes of the Federation.

(b)     the requirement of the land for mining purposes or oil pipelines or for any purpose connected therewith;

(c)    the requirement of the land for the extraction of building materials;

(d)     the alienation by the occupier by sale, assignment, mortgage, transfer of possession, sublease, bequest or otherwise of the right of occupancy without the requisite consent or approval.

In practise, overtime we have seen a very fluid interpretation of ‘Overriding Public Interest’ for the purpose of Land title revocation by State Governors. This includes for the sole purpose of frustrating a project championed by the Federal Government by a State Governor in the opposition (we saw this in the Second Republic); Intimidation of political opponents (we have seen cases where the C of O of a property in which an opposition party holds its meetings was revoked by a Governor). We have even seen a case, where the Certificate of Occupancy to a property allocated to President Yar’adua (when he was a State Governor) was revoked. Regardless of the propriety or not of the last mentioned incident particularly, at the time, it probably did more damage to housing sector investor confidence in Nigeria than whatever good it set out to achieve. As a potential foreign investor in the Nigerian real estate market pointed out to me, ‘if you guys can revoke the title of the property of a President, how safe will the investment of a foreigner like me be?’ Hopefully, when we get our heads out of our backsides, a little policy change like a mandatory Title Insurance Policy framework may serve to mitigate the fallout of such a title revocation and create more Housing sector investor confidence in our issued titles.

But then, we have never really been known to be good at coming up with the little solutions that make a big difference, have we?

Today we pay lip service to affordable housing yet we are all aware of the formal and informal bottlenecks that increase the cost of building a house;

  • We have made the access to clear property and security rights a long and torturous process thereby increasing the cost.
  • Consequently we have inadvertently made the cost of a piece of land with a Certificate of Occupancy much more expensive than one in the same location without proper title. Simple demand and supply logic suggests that the more real estate we have in the country with clear property and security rights, the less expensive the land will be.
  • Nobody has ever bothered to estimate how much ‘trapped equity’ the country has in land with inappropriate title. How many SMEs will be able to access financing if the owners real estate inherited under native laws and customs can be provided with eligible title.
  • We have a situation where the cost of Consent is a minimum of 15% of the assessed value of the land. Why wouldn’t housing be unaffordable?
  • We need to reduce and harmonise the charges for Building Permits and Consent. No Chief Oti-Okpo middleman or Revenue Agents should be part of the process.
  • When Long Term Mortgage finance is available then it’s probably expensive and in double digit interest rates. Unfortunately this is a case of the current Cost of Funds, inflation and several other factors. Even the Government of the day borrows from the market at double digit interest rates.

All what we have stated above are Government’s problems to solve; the right legislation, the appropriate fiscal and monetary policies plus meticulous execution and then watch the magic work itself.

For instance, once we sort out the problem with C of O issuance and Construction Finance, abolishing the Cash Reserve Requirement for Commercial Banks in Nigeria will free up liquidity, reduce cost of funds and force lending rates down. We can then legislate that a portion of this freed up capital be deployed to construction and mortgage finance. This will be supported by an appropriate Securitization framework to purchase the mortgage assets from Commercial banks and Primary Mortgage Institutions.

For like forever we have been looking for long term deposit liability to fund mortgage finance and people have offered all sort of proposals. Yet we have almost 30% of the banking industry’s total deposit liability locked up in cash reserve requirement. If liquidity is the issue here then we can agree on criteria and underlying documentation for primary mortgage loans written with liability that should ordinarily be part of CRR and government can securitize it in exchange for Treasury Certificates that qualify as part of a bank’s liquid assets.

Remember that in doing this government has to sort out the issues with land title and consent which should moderate part of the inflationary pressure that this will otherwise have created.

Call this a Local Fannie Mae ‘na nwanneya’ Freddie Mac if you like, essentially creating the securitization liquidity source that a typical FMBN requires to function. With this you will have a banking industry whose risk asset portfolio is made up of 30% Mortgage Assets.

CRR is sterilized at 0 interest anyway so a 10% or even less interest rate on this Mortgage Portfolio is conceivable, also solving the issue of single digit Mortgage interest rates.

Guess what?

The liquidity that will be unlocked from this structure is more than half of Nigeria’s 2016 Expenditure Budget and for a Government looking for a defibrillator to jumpstart the economy, such a crazy idea as this could just be it. The trickledown effect will be enormous and this will be way better and more targeted than the ‘Helicopter money’.

Crazy? Yes…but this is Crazy Season.

In most of the developed countries that we aspire to be like, Residential Mortgages as a percentage of GDP is well over 50%, in some cases like Germany it approximates 90%. 50% of Nigeria’s over US$520 Billion GDP is US$260 Billion. Imagine a Nigeria with Mortgage assets of US$260 Billion…that is N78 Trillion worth of mortgage financed housing units.

Imagine what N78 Trillion can do to the building materials and hardware sector.

Just pause and imagine!

You don imagine finish?

Oya, wake up!

But seriously, I take God beg all of una in the name of Oga Samankwe, his wife Osodieli and the 88% of Nigerian’s who are neither part of the exclusive middle class nor members of our super-rich cabal….

Nigeria Governmenti oh!!!!!!!! The Housing Affordability Gap is real!!!!

Bridge it and you will have solved almost 50 to 60% of Nigeria’s Affordable housing problem.

It is your responsibility!

Honestly, it is that easy and the models abound.

I swear! I don tire!

 

Have you ever lived in or visited a Nigeria Police barracks before? Visited as in, spent some time moving around the environment, entered and used the bathroom or toilet…the kitchen…have you?

Well I have.

I mean, I have visited one.

As well as lived in another…sort of lived in.

All I can say is that living in either a Police or Army Barracks in Nigeria is not for the faint hearted.

Unless you live there.

And you are a Nigeria Police or Army Officer.

But then you already know that our Officers are ‘Obi Agu’ Lion hearted, abi?

So how did I come to live in a Barracks?

At some point during my Unilag Undergraduate days (either 1995 or 1996), I had found it convenient to live with a friend and Police Officer classmate  (he is still a great friend to this day so this is not intended to denigrate you bro).

This was at Pedro Police Barracks in Shomolu Lagos.

I don’t know how best to describe the place….but I will try.

Pedro Barracks was a slum.

A colony comprising a number of decrepit buildings and a police station.

The colony’s open gutters reeked of an odoriferous presence that was not of this realm. Yet barely breaking the surface of the gutters, swarms of mosquitoes held town hall meetings and elections, jabbering in tongues several high-pitched languages. With the benefit of hindsight, it is now clear to me that these mosquitoes must have cross-bred with an alien intelligence, fi not how they for take get that kind accurate GPS sense? But that is a story for another day.

 

The concrete covering slab of one of the colony’s Soakaway pits was broken and askance, with putrid faecal sludge spilling into the ‘yard’. Some of this toxic spread managed to find its way into the nearby open gutter…a gutter that had already seen enough.

Yet there was always frenetic and lively activity at the Barracks, day and night. A pool table had the colony’s youth perpetually engrossed, that and a Barbers shop that doubled as a small Video Club run by the son of one of the police officers. There was also the Mammy Market whose major attraction was the Anambra woman that served an aromatic and finger-licking export quality onugbu soup, always garnished with long-strands of tastey dried ‘aja-azu’ fish.

And there was Samav Hotel, located at the adjacent Igbehin Adun Street, with its multi-coloured disco lights laced balconies, loud inchoate live band, smokey interiors and weary smiles wearing aged and young ladies of the night.

Pedro Barracks was disgustingly filthy, and this was for me who at the time lived in the quintessential Lagos ‘Face-Me-I-Face-You’. A room so tiny and claustrophobic that if you stretched both arms with your fists clenched, you will still touch both walls. Where you had to take your turn to use the two slimy toilets and bathrooms that served what looked like an entire clan, brush your teeth in the gutter in front of the house while hailing your neighbours as they dashed off to work, and depending on the direction of the morning breeze, intermittently inhale the stench of the obnoxious and alive green-black alchemy that wriggled and squirmed (without flowing) in the gutter.

It is this me that found Pedro Barracks extremely filthy, so you can imagine.

But the police officers and their families in the Barracks were said to be lucky. I was told of a Police Sergeant whose room in a Barracks in Onitsha lacked a ceiling board. During the day, the corrugated iron sheets on the roof became conductors and amplifiers, magnifying the Sun’s heat and literally frying the brains of all the room’s inhabitants. It is such a man that the authorities arm and ask to police the rest of the populace.

Are we okay at all?

So it was after my sojourn at Pedro Barracks that I started viewing our Police Officers through a completely different prism. How do you subject human beings through such inhuman and perilous health conditions then give them guns to guard the streets?

What do you expect?

So fast forward to circa 2007 (by then I had long upgraded from living in a face-me-I-face-you to a relatively decent abode), during the tenor of Mike Okiro as Inspector General of Police (IGP). The IGP had made the provision of accommodation for the 310,000 Officers and Men of the Nigeria Police Force a cardinal point of his Nine (9) point reform agenda. At the time, 75% of the NPF’s Officers and Men lived outside Police accommodation with the NPF having to pay largely inadequate monthly rent subsidies of between N2,518 (Two Thousand Five Hundred and Eighteen Naira Only) for Constables to N45,793 (Forty Five Thousand Seven Hundred and Ninety Three Naira Only) for the Inspector General of Police (note that the NPF’s remuneration has since been reviewed though I hear that its still largely inadequate).

But I am sure that the IGP did not achieve his ambitious housing goals.

Why am I so sure?

Because the extant funding models deployed towards such projects at the time do not support his ambitions. There is a disconnect between his ‘Vision statement’, being his objective, and the ‘mission statement’ being the business and functional level strategy to achieve it.

Historically, Police and Army housing in Nigeria has been approached from a Brick-and-Mortar perspective, with the Nigerian government being the sole financier of all Barracks and estate developments. Consequently, with competing demand from other sectors for limited government resources, it has found little support.

Yet Police and Army housing should be one of the easiest to provide. Ask the UK, ask Australia, ask the US.

How ha sit been done?

You see…

Globally, Armed Forces Barracks, Police Barracks and Military installations are built in the less densely populated areas of cosmopolitan cities to protect National security interests. Military installations particularly are off-limits to the general public therefore high traffic locations are usually avoided. Military and Police Barracks and installations also require sizeable expanse of land to enable training exercises etc. Such facilities allow for future expansion and upgrade to meet with increase in personnel.

However our British colonials unwittingly gifted our Police and Armed Forces with an Aladdin Wish Magic lamp, a diamond in the rough that our leaders seem to be treating like a crusted stone.

You see, in every country colonised by ‘the Empire on which the sun never sets’, military installations; barracks, offices etc. are always located strategically to protect the elite.

Yep! You heard me! To protect the big-men, whether oyibo or locals.

Even those that were originally located in the suburbs / outskirts of the city (to protect the likes of you and I at the time) have since blended into residential and business districts due to urban expansion. Now, while the value of the real estate in these locations have grown and appreciated , most, if not all the barracks and installations are currently in deplorable states (due to lack of maintenance) and are now almost all slums.

Think Lagos; Obalande Kem-Salem Police Barracks (in Lagos Island), Doddan Barracks (Off Awolowo Road Ikoyi Lagos), Bonny Camp (Victoria island Lagos) etc. Think the locations of Barracks in all the erstwhile Regional capitals and commercial centres of Nigeria; Lagos, Ibadan, Enugu, Benin, Kaduna, Port Harcourt etc.

I recall that sometime ago, the Lagos Environment and Sanitation Network notified the public of a drainage channel in the Obalende Mammy Market (behind the State House and Doddan Barracks) heavily contaminated with faecal matter. Subsequently in 2007, a report by the Department of Urban and Regional Planning, Faculty of Environmental Sciences, University of Lagos, recommended that the Obalende Police and the Doddan Barracks should be reduced in size and freed up land used for public housing.

I doubt that anyone ever acted on this report.

Yet the irony is that given the prime value of Real Estate in all these locations, significant value can be unlocked by the sale and relocation of these barracks, proceeds of which will be utilized to provide new purpose built first-class training, sports, recreation and accommodation facilities for service men and women, essentially gift them a better quality of life.

I have argued that this can be easily achieved through a Private Sector led initiative. Such a model will create a platform for massive investment in / restructuring of the Police and Armed Forces’ existing Real Estate via three key core outputs;

  • A complete inventory and valuation of the Police and Armed Forces’ developed and undeveloped sites (i.e. Brownfield and Greenfield sites respectively), especially those in various City Centres across the country. This will assist in identifying which sites are best placed to serve as core sites for the development/redevelopment scheme that can be used to provide thousands of new homes managed and developed efficiently and effectively.
  • Setting up a project consortium that will fund and manage the delivery and integration of the consolidated programme, including the development of the identified core sites into first-rate purpose built facilities that will ultimately ensure that the Police and Armed Forces personnel are conveniently housed and taken care of thereby attracting quality men and women of the community to beef up their ranks;
  • The sale of surplus sites and managing the complexities that will arise as the Barracks will remain occupied and operational during the building and refurbishment phases thus Police and Military Personnel may have to be moved around as construction work progresses.

Yep! Thats it in a nutshell.

So with the right funding structure, over a 5 to 7 year period, our Police and Armed Forces can be availed with state of the art housing, office and training facilities.

Interestingly, there are several other permutations that can be built into this model to enable the Officers of our Police and Armed Forces not just ultimately own the homes, but ensure that the model generates revenue to fund the construction of new housing units and facilities for future recruits.

It can be done.

All that is required of our leaders is a bit of creativity and gumption.

But na Naija we dey.

Who gumption don ever epp?

 

 

So Rwanda’s GDP growth rate in Q1 2016 was 7.3%, RWF1.536 Trillion, up from RWF1.384 Trillion in Q1 2015. The Services sector contributed 46%, the Agriculture sector 33%, the Industry sector 15%, and 6% was attributed to adjustment for taxes and subsidies on products.

In this Quarter, the Agriculture sector grew by 7% and contributed 2.1 percentage points to the overall GDP growth. Activities in the Industry sector grew by 10% and contributed 1.5 percentage points to the GDP growth, while the Service sector increased by 7% and contributed 3.4 percentage points to the GDP growth.

Now, this is despite the IMF’s projection that the Rwandan economy will slow down from 6.9% growth registered last year to 6% for two years as a result of shocks in 2016/17, before picking up in 2018.

So what ‘shocks’ was the IMF referring to?

  1. A firming dollar which has resulted in the Rwandan Franc depreciating.
  2. The falling export revenues (due to the slump in global commodity prices) and a ballooning import bill.
  3. The attendant downward pressure created by 1 & 2 on the Country’s Foreign Reserves and exchange rate

Yet the economy remained resilient and actually grew in Q1 2016.

Inflation was / is contained averaging 2.5% in 2015 and 3.4% in Q1 2016.

To put this in further perspective, the fall in export revenues was mainly due to Mining exports (the country’s biggest source of FX) which crashed by almost 50% in 2015, leading to a deterioration in the country’s Current Account deficit from 16.4% in 2014 to 18.1% in 2015.

Government’s response?

Continued exchange rate flexibility as the principal adjustment tool supported by tighter fiscal and monetary policies to help curb demand for imports.

The result?

Most macroeconomic targets in 2015 were met supported by structural reforms, notably changes to boost domestic revenue collection, reducing liquidity overhangs, strengthen financial market supervision and functioning, and improving domestic revenue collection, addressing energy supply constraints, prioritization of infrastructure towards productive uses; implementing a private sector led approach to exports and intensifying efforts to increase agriculture productivity.

The 2016/2017 budget will aggressively promote exports as well as import substitution measures. “6% of development budget would be spent on developing textiles, garments and leather industry, add value to minerals, coffee and increase tea production, which would also operationalize horticulture, livestock products and services exports as well as expand the export growth fund”.

The 2015 Revenue budget was funded 51% (I need to confirm this) via internal sources while the 2016/2017 budget is projected to be funded 62.4% by internal sources.

So let me summarize.

  • Despite a 50% crash in its FX earnings, exchange rate remained relatively stable compared to that of other commodities driven African economies.
  • This exchange rate relative stability was achieved through continued exchange rate flexibility as the principal adjustment tool supported by tighter fiscal and monetary policies to help curb demand for imports.
  • The economy / GDP witnessed strong growth not a contraction.
  • Inflation remained contained, averaging 2.5% in 2015 and 3.4% in Q1 2016, well within Government’s target maximum of 5%.
  • There is a clear nexus between the country’s Corporate Level strategy to increase exports and import substitution (in a bid to reduce the current account deficit) and its Business Level strategy, clearly evident from the budgetary allocations.

For instance, in the 2016 /2017 Budget;

  • 62.4% of the budget will be financed through domestic revenues.
  • 45% is allocated to health, education, justice, stability and food security.
  • 27% is allocated to economic transformation with key focus on textiles, garments and leather industry, agriculture export crops, agri-business, construction, livestock, wood industry, minerals, tourism and ICT and trade and investment facilitation.
  • 13% is allocated to rural development.
  • 10% is allocated to accountable governance.
  • 5% is allocated to increasing productivity and youth employment.

So, for my Naija people back home…….if I ever hear you mention ‘crash in crude oil prices’ as an excuse for the current economic chaos that we are facing then you deserve a proper and thorough koboko lashing. Crude oil as well as commodity prices have always gone through a boom and bust cycle but it requires dexterity and planning to weather the storm and inclement weather. The appropriate fiscal and monetary policies serve as the raincoat, umbrella, gumboots, life-raft, whistle, life-jacket and torchlight that largely insulates a country from the buffeting weather.

In the same vein, if I hear you mention ‘not saving for the rainy day’ again as an excuse then you deserve to be frog-Jumped. Saving for the rainy day is important however what if there was no sunny day? Are we saying that Government should stop functioning?

Nigeria’s economic team should swallow its pride and look to learn from Rwanda. Better still President Paul Kagame should do the rest of Africa a favour and set up a training school for our future, present and past leaders on how to run an economy.

The first set of students should be the Presidents of Nigeria, South Africa, Angola and Ghana.

Politics and jokes asides, this may just be Kagame’s greatest legacy to the rest of Africa.

Maybe graduates from this school will be awarded a DCA, a Doctoral Degree in Country Administration.

 

Nigeria’s Healthcare and Housing challenges have one thing in common, both are primarily financing model problems, unavailability of guaranteed off-take. All the other issues in both sectors are mostly either secondary causes or subordinate resultant effects.

When our politicians and coupists are out of Government they refer to our hospitals as mere consulting clinics. Yet once they are given a shot at governance, providing affordable housing and affordable, accountable and appropriate health care to all Nigerians suddenly becomes Winch and Ojuju craft plus rocket science.

Its either that we no dey see other countries, we no dey hear word or we no dey listen.

On the health sector I have consistently argued that all that is required to transform the sector is a government driven universal healthcare insurance and financing model, partnering with private sector health insurance providers (Tax based Health Insurance + Social Health Insurance + Private Health Insurance). Only this will ensure that quality health service is delivered cashless and with equity to all Nigerians. Not Coup speeches! Not poorly thought through election campaign rhetoric! Not propaganda!

I also appreciate the argument that given our extant tax base and tax payment habits, workers in the formal sectors mostly bear the burden of tax payment.  A situation which is further compounded given that this represents a small share of Nigeria’s 180 million citizens.
 
But this is when and if we are focused on payroll taxes. What if our Tax Based Health Insurance framework is mostly driven by consumption and earmarked / hypothecated taxes? import duty, value added tax, sales tax, premium alcoholic beverage tax, special cigarette taxes, private jet tax; adult entertainment tax (why not?) etc.
 
Of course we can also look at Capital Gains Tax, Tax on rent, etc. the canvas is actually blank and ours is to paint whatever consumption tax picture we desire. Back this with Social and Private Health Insurance systems that rely predominantly on a share of formal workers’ salaries.

On Affordable housing I have argued that all that is required to remedy our affordable housing stock deficit is a government driven wholesale purchaser of mortgages, partnering with private sector wholesale purchasers, other institutional investors (both local and foreign) as well as Sovereign Wealth Funds.

Our people are quick to run to India when they fall sick yet the transformation we see today in India’s healthcare system was driven mainly by the country’s Insurance Regulatory and Development Authority (IRDA) legislation of 2000 which opened up the Health Insurance sector to private players.

Prior to this framework, healthcare delivery in India was very much like what is currently obtainable in Nigeria. After the framework was introduced, Health insurance membership in India quadrupled between 2007 and 2011 and by 2010 more than 25% of India’s 1.3 Billion population had access to some form of Health Insurance.

What was the result?

Though India currently spends cumulatively 4.2 per cent of its GDP on healthcare (of which just 1 per cent is being contributed by the public sector), yet the healthcare sector is one of the country’s largest sectors in terms of employment generation.

Investment opportunities in the Indian healthcare sector has also increased significantly and the sector (comprising hospitals, medical device manufacturers, clinical trial centers, telemedicine companies, medical tourism, health insurance and medical equipment) is one of the country’s most attractive investment targets for Private Equity (PE) and Venture Capital (VC) firms. This sector was worth US$100 Billion in 2015, and is expected to grow at a CAGR of 22.9% to US$280 billion in 2020.

Chineke! US$280 Biiiillllion!!!!

By the way, Medical tourism in India (the wan wey our people dey follow contribute to) was a US$3 Billion market in 2015 and expected to grow to US$10.6 billion by 2019. Even equally interesting is the fact that the average investment size by PE firms in India’s healthcare chains has already increased to US$20-30 Million from US$ 5-15 million per deal. To put this in proper perspective, India’s hospital and diagnostic centers alone attracted Foreign Direct Investment (FDI) worth US$3.41 billion between April 2000 and December 2015, according to data released by the country’s Department of Industrial Policy and Promotion (DIPP).

Nigeria una dey see una sef?

Investments of this nature would have been impossible if India was to rely on our current style of out-of-pocket spending to attract investors as there would have been no predictability of cashflows required for investment decisions. An interesting corollary is that such private sector investments in Nigeria’s health sector will ultimately trigger the much needed reverse brain drain. All those our plenty plenty brilliant brothers and sisters practicing medicine in the US, Canada, UK and the rest of the world will flock home.

No need for Andrew to checkout..na checking-in we go dey do!

Now…the problem with our housing sector is also ‘familiarly-similar’.

Where will the US Housing market be today without a wholesale purchaser of mortgages from the PMIs? Again I have argued that only this can turn on the funding conveyor belt that provides the short to medium term construction finance (likely provided by commercial banks) that funds housing stock creation, funds the writing of mortgages (provided by PMIs) that acts as exit for the construction finance providers, then provides a platform for PMIs to sell those mortgages to the earlier mentioned wholesale purchasers in a bid to liquefy their assets and write additional mortgages to take-out construction finance.

In summary, Nigeria’s housing problem is based on the lack of an appropriate financing model and not a brick and mortar problem.

It’s the result of a poverty of ideas, not that of lack of funds.

Our healthcare problem is mainly that of the absence of a sustainable financing solution…the much touted lack of infrastructure, drugs and skilled personnel is how the problem presents…a symptomatic manifestation of the problem.

A poverty of ideas.

You see….was that difficult?

No!

Are these novel solutions?

No! They have all been tried and tested in jurisdictions similar to ours.

So what is the issue nah?

I guess that we have a major hearing and ‘seeing’ problem in this our country.

What else can I say?

P.S – In all this..make una beg oga Fashola to give us light make we take see road!

This has been a very expensive one year specialist MBA education on the interplay of economic theory (read basic demand and supply principles), international trade, the global financial markets and appropriate interventionist and predictive monetary policies. It was an all-out battle between obstinacy, star-gazing and wishful thinking, ‘native intelligence’, dishonest intellectuals (una know una self), ethical and motivational blindness and obsequiousness on one hand and tested and established economic theories on the other. A one year lesson in cause and effect and as ethical blindness rightly teaches us, ‘why good or ethical leaders make wrong or unethical decisions’.

The actual absolute cost (some of which is irredeemable) plus the yet to crystallize cost of this one year rigmarole in economic wilderness; job losses, shut down businesses, trading losses, FX losses, toxic banking industry risk assets, then you add the opportunity costs and Time Value of Money etc…. unquantifiable in monetary terms. The good news however is that we found the courage and common sense to do what we should have done over 10 months ago. It is also nice to see that we went the whole 9 yards rather than opting for a face saving dual tiered exchange rate regime, something I thought was an option, not just to save face but to enable State Governments which had accessed US$ denominated debt (and generate all their revenues in Naira) access the requisite FX to service the debt at a discounted rate. I will come back to this point later.

Unfortunately, recovery from the damage done may take another 18 to 24 months to cure but the good news is that the new FX policy will enable inflow of the much needed Foreign Direct Investment and Foreign Portfolio Investment US$ into the market. Hopefully, for starters, the flows will come in fast enough to avert another impending fuel scarcity. Using the current rate of 12 months Nigerian Naira Non-Deliverable Forwards as an indicator, the exchange rate may ultimately settle at N366/US$.

I also read an opinion of an Oyibo analysts that the policy will trigger hyperinflation. I humbly disagree as the current price of goods and services are mostly reflective of the parallel market rather than the erstwhile CBN official exchange rate. Prices may go up once the artificially managed demand is fully unleashed on the market but this will modulate subsequently as supplier increases versus demand.

The good news for some of our beleaguered State Governments is that the Niger Delta Avengers and their ilk willing, the FX earnings portion of FAAC allocations will be converted at the new market determined rate however this may not have much of an impact for States that have US$ denominated borrowings. It also means that it is in the interest of all to resolve the issues around the degrading of the country’s crude oil production capacity.

A word is enough for the wisdom….okay.. ‘wisdom’ is not the superlative adjective for ‘wise’, but you get what I mean.

For those who are out on the streets (with cymbals, brass and bata drums, shekere and Ojah) celebrating this new cure-all gbogboise elixir for our economy and of course, for their close relatives, those who are watching and waiting in the wings, coiled to pounce with their ehe! Shebi I talk am say this devaluation will only make things worse! Throwing around the infantile Strawman logic of ‘Oya, how many factories have you built since the free float or devaluation?’

This is not a fix!

I repeat!

This is not a fix!

The new policy is simply one portion of the mosaic of policies and structures that can resuscitate our ailing economy from the battering it took from unconscionable and irrational policies. The immediate objective is to enable the Naira find its true value as this will attract inflow of the much needed foreign capital including funds held abroad by Nigerians.

But what we have just done is actually the easy part.

The policy does not address the underlying fundamental issues..the difficult part. The  part which will lead to a sustainable solution is to aggressively work on the ease to doing business in Nigeria as if our life depends on it (which it does literally!); introduce policies and create the infrastructure that will reduce Nigeria’s import dependence, promote export and stimulate inflow of foreign capital. These policies will ensure that importing is not more attractive and profitable than producing locally and this will naturally lead to the unbanning of the forty-one (41) items classified as “Not Valid for  Foreign Exchange” as detailed in the CBN Circular Ref: TED/FEM/FPC/GEN/01/010; to stimulate research and development towards transiting ours to a knowledge based economy; to increase local sourcing of industrial inputs; all those things that we have been glibly mouthing for aeons but have failed to execute over the last 50 years or so.

One last thing.

For those apologist who are celebrating pictures of a near empty business class compartment of a Lagos to Dubai Emirates flight as a sign of the success on the fight against corruption, ‘as looters are no longer looting’…see ehe! We all just collectively spent billions of dollars on a specialist MBA education for our leadership. If you cannot tap into this expensive adult education then your brain probably needs a full reset to factory default setting (which by the way is potty training and kindergarten education).

In all this (if the other policies are fine-tuned and executed fully, then there is glimmer of hope, light at the end of the proverbial tunnel, better meat for fish head…you know what I mean…

The hope is hopefully in the next 18 to 24 months oh given the level of rot in the last 16…sorry! given the level of fiscal and monetary policy lunacy over the last one year.

Assuming that we all truly took our expensive lessons to heart.

But then adult education comes at a cost they say, time and monetary…and it’s pupils can be obstinate.