In this interview with Viewpoint Housing News, the Chairman of Value Chain Project Consultants Ltd, Joshua Egbagbe identifies the missing link in the effort to provide shelter for the low income earner in Nigeria. Egbagbe with a Ph.D in Public Health Management says developers build without regard for those who truly need shelter, citing example with 1,000-housing unit project in Bauchi state that serves no home seekers.
Viewpoint: You had a town hall meeting with labour unions in Abuja on 31st July 2018. What was the crux of the meeting?
Egbagbe: The vision and mission of Value Chain Project Consultants Ltd is based on the value proposition which we discovered over the past few years. Basically, there’re a lot of gaps in the value chain of affordable housing delivery in Nigeria.
The most critical gap is the miss-match between the affordability capacity, the purchasing power of individual off-taker and the property on offer by developers across the country which is why there’s a strong paradox of housing…unoccupied estates, whereas there’s a very humongous deficit in the housing stock for willing and even ready Nigerians.
When you look at it from that angle, you’ll notice that the gap between what’s available and what the off-takers who need the houses can pay for is quite wide. It’s that gap we’re set to manage and fill as much as we can.
Viewpoint: How long have you been on this mission?
Egbagbe: From 2012/2013. I take you through history. We were engaged by the Bauchi State government on a PPP [Public Private Partnership] to construct a thousand units of housing for Bauchi State civil servants. Government was supposed to make it easier for them by providing land and infrastructure. Federal Mortgage Bank was also supposed to make it easier by providing funds for the houses – which they did but they gave us money for 571 units when they were still doing EDLs [Estate Development Loans].
A year into the project, the Bauchi State government had not taken care of the infrastructure or even paid for the land. So we had to raise additional funding to take care of infrastructure as well as pay for the land; by which time, of course, the structure we had built on ground already for close to a year, some of them had been flooded with heavy duty rains and water logging because where we were given to build in the outskirts of Bauchi was actually a waterlogged area– former rice farm along Bauchi-Jos road.
We suffered so much from that experience and up till now, we have stock of 571 houses on ground in the middle of such a deficit.
Viewpoint: Aren’t they occupied?
Egbagbe: No, 238 of them were commissioned by Ms Ama Pepple, the Minister of Housing then and of course, the FMBN [Federal Mortgage Bank of Nigeria] board, Gimba Yau [former Managing Director, FMBN], [former] Bauchi State Governor [Isa Yuguda].
Again, the governor made promises that he was going to take care of infrastructural reforms and all that. Nothing is done up till now. So the prices of the houses, though reasonable, were still unaffordable to the general populace of the workers. And that’s what triggered the Value Chain concept in 2013.
By 2013, I had begun to set up the Value Chain Company. Value Chain mission from the beginning was to research into Value Chain. Value Chain means the different linkages that make up the productivity, lifecycle of a product or a project toward meeting a demand factors and demand pool.
There was a desire in my heart to investigate this very illogical, irrational miss-match…I started this data-driven research and development of the Value Chain on Affordable Housing Delivery. In 2014, I met the German agency called GIZ. They liked what I was doing, provided some level of funding for my research work. Nigerians would not just understand what I was talking about.
But eventually, we’re able to prove that this concept, which is to change the paradigm from building first, then looking for off-takers and mortgage, we flipped it the other way round, saying let’s first get the off-takers, pre-qualify [them], let’s first get the mortgages even applied to them before building to their pocket capacity. So affordability for us is not about making the houses cheap.
If that was the issue then, there would be no problem. Off-takers in a way target their individual capacity to afford a mortgage. That’s a tall order – how do you target 1 million Nigerians? How do you target even 1,000 Nigerians individually?
But we did it. That’s how we came about such robust platform – the Value Chain Market Affordability platform which integrates the off-taker’s expression of interest, capacity to afford a mortgage to pay, what the developer needs to do to deliver the houses in a customised fashion – so it’s customised to the off-taker’s indices.
That way, we can then target cost of land, government’s intervention, and cost of construction funding. Even though we’re off-taker’s affordability strategist and expert, we have to be jack of other trades in the housing sector. We’re much specialised in the off-taker’s matter but we have to rigorously understand other aspects of the value chain.
After doing the individual surveys, we now integrate and accumulate them so that we can set up mini and maxi estates in different locations we’re working. We’ve done extensive work in Plateau State and the government is now using our data to get developers to build for them.
It’s being slow, you know, the economies of the states are very weak. State governors are grappling with salaries and they’re not able to look beyond that sometimes.
We’ve done extensive work with the Trade Union Congress and we’ve currently pre-qualified people for an estate about to be started in Abuja — Lugbe axis which the Voice of Nigeria owns. That’s what prompted the stakeholders meeting you referred to at the beginning.
The stakeholders meeting carried the theme Value Chain Off-takers Affordable Strategy for Affordable Housing Delivery for Nigerian Workers. We were able to show over 500 people that came that…there was a big rush for the pre-qualification form for the Voice of Nigeria staff.
Viewpoint: So what has become of the 1,000 Bauchi State houses?
Egbagbe: All the houses are still left because we allowed people to pay a token equity and move in about three, four years ago and then they were supposed to keep on paying but they’ve not paid. Right now, I can say the estate is vacant, even though there are people living there, they’ve not paid rent. It’s quite tough.
Viewpoint: So you did like the average Nigerian developer. You just went to Bauchi to build?
Egbagbe: That’s the model. For example the FMBN is about building 100 units of houses across the nation, using the old model. But the good thing about FMBN’s new management is that they’re working actively with my company to install in their ICT unit our model. So our software is being installed in FMBN system so that they can begin to pre-qualify and profile all the NHF [National Housing Fund] contributors using our software.
Viewpoint: Talking about affordability, do you critically look at the type of house? An average Nigerian wants a three-bedroom, four-bedroom house even when his income is small?
Egbagbe: The beauty about the Value Chain Off-takers Affordability Strategy is that having got the off-taker’s affordability in place, every other thing else is customised. It’s like pocket responsive strategy. Your pocket capacity determines what kind of house you can afford.
Viewpoint: Attitude has always been a problem.
Egbagbe: That’s exactly why I said there’s a paradigm shift. That former attitude was based on the ruling spirit, the ruling mind-set. When people see there’s demand for two-bedroom, three-bedroom – I also did the same mistake. I built three-bedroom because the mind-set is that there’s where the demand is. But that’s not where the pocket capacity is.
I give example. I did…work for the Ogun State government. Our data was used by the Ogun State Housing Corporation. People that were not earning much money, our data showed the very brilliant MD of the Ogun State Housing Corporation, Arc. (Mrs) Akinwumi Jumoke that though workers didn’t have a high affordability of N5 million, N7 million, but the data she had, she was able to do what we call Revert Engineering. So she built to the capacity of her staff – pilot we did and she came up with an estate that is called Expandable Estate.
It can’t be done for Abuja where you have high-rise but smaller states like Ogun…she did things like one-bedroom that is expandable to two or three-bedroom later. That way, she provided the basis for them. The estate is completed – it’s beautiful.
Viewpoint: What about the factor of location? People rush into Abuja every day and they want to build a home in Abuja whereas land is exhaustible resource.
Egbagbe: You see, I can’t talk much of the detail…But we have a process to front load some questions. When we analyse them, we get the statistics that may not be obvious to the eyes.
Viewpoint: How does one access your data, your services?
Egbagbe: We’re putting together a business model. First of all, the lifecycle of Value Chain Project Consultant so far has been R and D, concept validation, then marketing of the concept where we are now. We’ve successfully marketed the product to the Federal Mortgage Bank which has given us an offer to install it in their system which we’re doing.
We’ve marketed to Trade Union Congress who is now our global partner. We’ve marketed to companies I wouldn’t want to mention their names.
For developers, we profile and pre-qualify their target demographics. They pay us a token for that. We’re not charging much now…For the off-takers, we do it for them for free now other than when they want full certification then they pay a token of N500 for downloading their stuff.
For government agencies like FMNB, we charge a token to customise our software to meet their needs. For state governments, they’re not paying. Plateau State government hasn’t paid us a kobo but we have done over 1,000 off-takers profiling for them. We’re hoping that when developers start working there, they will pay us.
We also train. We’ve trained the FMBN staff across the country and they paid us a token for that.
