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Lagos set to review PPP processes as initiative achieves only 10% success in 5yrs

Efforts by the Lagos State government to boost housing stock with an output of 15,000 units through a Public Private Partnership (PPP) with private estate developers initiated in 2009 has achieved only 10 percent of the projected units.

The partnership, which involved the developers providing the needed capital while the state government provided land at different parts of the state, was expected to act as an intervention in affordable housing provision for medium- and low-income earners in the state.

Disturbed by the slow progress of the partnership and minimal result achieved, the state government says it is set to review the scheme by softening the process for developers who, the government understands, are facing tough times meeting their part of the bargain.

“Evidently, our PPP scheme has not met the target we set in 2009 for some reasons, which include lack of funds for developers to deliver the housing units as our model has always been to provide the land while the developer sources the funds and delivers the units,” Bosun Jeje, the state commissioner for housing, told BusinessDay in an interview.

“Real estate developers are not immune to present economic realities; so when there are unfavourable monetary policies and economic downturns, it also affects them, more so because housing projects are capital intensive. Also, the resources to buy homes have been on the decrease lately, so it’s been really tough for some of the developers to strike a balance in meeting their part of the bargain,” Jeje said, adding that the state government was already reviewing the scheme and was willing to soften the process.

A 2014 report on Lagos housing development by Residential Auctions Company (RAC) notes that the slow progress by developers to deliver these homes highlights the challenges faced by real estate developers in accessing funds and the complexity of securing adequate title.

Some of the units already delivered under this scheme include Sunrise Estate Ipaja, which consists of 628 units of two- and three-bedroom apartments. Another is CHOIS Gardens developed by First World Communities, which has delivered 400 units of two- and three-bedroom apartments in Agbowa, and the 78-unit Elegant Court in Ikota.

Jeje, however, revealed that more units were expected by year-end as some developers were already at advanced stages of delivering their units.

“Some of the units are at roofing level in different parts of the state, while others are still under construction,” he noted, adding that about 1,500 units were expected by year-end.

The commissioner revealed that the state government was working on a policy that would assist the developers, explaining that one of the steps they were considering was that once the homes were delivered, the state government would off-take them from the market and inculcate them into the LagosHOMS units so that developers funds would not be tied in the market.

On a possible penalty for developers who have not delivered their expected units, Jeje stressed that they could not be punished because most of them had contributed their resources and were willing to execute the project if not for the unfavourable economic conditions.

Odinaka Mbonu
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