Stakholders in the built sector say the delay in passing the 2017 budget which is making uncertain the amount of money to be spent in the industry may impact negatively on housing delivery this year. Th e country has between 17 million and 18 million housing defi cit and will need one million houses yearly to fi ll the gap. Th e delay is resulting in the loss of billions of naira in investments as there is no template for planning.
Access to fi nance remains a major constraint to real estate development, and housing is typically fi nanced through budgetary appropriations.
As a quantitative expression of a fi nancial plan for a defi ned period of time, the budget, according to the experts, is required to stimulate the economy by pushing money into the system and should not be delayed. Last year, the federal government’s inability to pass the 2016 appropriation bill on time created fi scal uncertainties in the economy, and private sector operators, who are still groaning under huge losses due to the delay, are afraid of suff ering again this year According to the Project Director, Artic Infrastructure, Lookman Oshodi, in a developing economy like Nigeria, where government is the largest spender, the moment there is no offi cial spending on project implementation, it results in cash squeeze which will aff ect diff erent components of the housing sector.
Oshodi said the delay was also aff ecting mortgage refi nancing which depends largely on government spending and when it is not coming as at when due, will slow down investments in diff erent components of the real estate. He said the delay was creating price fl uctuation because of the uncertainty on the budget implementation since manufacturers depend on government benchmark on oil price and other rates to work out their own budgets.
Th e situation is also causing instability in the prices of building materials and reduction in mortgage fl ows. Among the resultant eff ects, according to Oshodi, is that government’s intention of building 40 blocks of houses through direct construction in each of the 27 states that have made land available may fail since the execution of the programme depends on the availability of funds which is tied to the release of the budget.
For mortgage banker, Arinze Adigwe, determining the impact of the delay in the passage of the budget will require a quantitative analysis which will be a guide for stakeholders as much of what has been known is merely qualitative. To a private developer and Managing Director of Realty Point, Mr. Debo Adejana, a budget normally stimulates an economy by pushing money into the system, and thereby creating activities in the housing sector as people crave to satisfy their needs.
