With the successful intervention of some organisations in road construction, the Nigerian government is considering Dangote Group and some other key blue chips for housing tax credit schemes to encourage them to build affordable houses in the country.
Other firms being considered for the scheme according to a source familiar with the idea, are BUA Plc, Flour Mills of Nigeria (FMN) Plc, Access Bank Plc.
These companies have satisfactorily constructed some roads including the Apapa/Oshodi, Oniru road in Victoria Island and many other strategic roads across the country with the infrastructure tax credit scheme and are seen to be capable of delivering on the housing idea.
Government mooted the idea owing to its inability to bridge the country’s 22 million housing deficit gaps alone.
Government revenue has thinned but responsibilities are growing, making it difficult to achieve its plans under the Economic Recovery and Growth Plan (ERGP).
This idea was part of deliberations at a recent meeting of the Presidential Enabling Business Environment Council (PEBEC) with some of the companies in attendance.
The housing scheme being considered by the present administration of Muhammadu Buhari is expected to bring succour to millions of Nigerians who are overwhelmed with housing challenges and the rising cost of decent accommodation in the country.
The middle class and the low-income earners are the targets in this idea which may be modelled after Lagos state’s low-cost housing scheme.
“We are more concerned about houses for people who are in the low-income category. We are less concerned about people who want to live in Ikoyi and Banana Island; they can afford that and they don’t even require mortgages”.
“We are looking at people in the low-income brackets. The critical thing to do to reduce housing price is to look at the basic economic indicators. To reduce prices, we must increase the supply of affordable homes in the country”.
The idea is accepted by many owing to the operations of some of the firms in the construction industry, aside from being producers of key components for buildings like cement.
The fact that government can easily recoup its money from the proceeds of the sale of the house unlike the road projects makes the idea acceptable by members of the committee, according to the source.
“This is something we can borrow for, knowing that every investment in housing has multiplier effects more than the roads because other sectors are affected positively by housing.”
According to him, the government believed that bringing on board the likes of Dangote, BUA, FMN and others would help to cushion the demands for the houses as the government could not do it alone.
He added that the issue of housing deficit in Lagos State was raised at the meeting where the influx of people into the state was a factor.
Highlighting further on the outcome of the PEBEC meeting chaired by the Vice President, Yemi Osinbajo, he hinted that the meeting admitted that house price, household incomes and the mortgage interest rates are the three major factors affecting affordable housing in Nigeria, and the committee wants to look for ways to surmount these.
“You know in the last two or three years, we have had the issue of infrastructure tax credit and the government has used it successfully to construct new roads that we are all enjoying now. Of course, incidentally, we know some of the major players in this area are those even in the housing value chains.
“We know about had the Oworoshoki road constructed by Dangote the under the infrastructure tax credits. We also know about the one by BUA. We know Dangote and BUA are major producers of cement, which is a major component in the housing value chain. We also know about the road they built linking Kogi and Kwara State. We also know about the Oniru road in Victoria Island constructed by Access Bank which is a key real estate lender. So the government is suggesting this as a means of delivering affordable homes and to be called a housing tax credit.
‘In order words, the government wants to engage companies who want to use this housing tax credit for delivery of affordable houses”.
It would be recalled that Nigeria’s Federal Inland Revenue Service (FIRS) last year issued tax credit to some Nigerian firms so as to engage in infrastructures like roads and others.
The tax agency issued tax credit certificates worth N22.3 billion to Dangote Cement Plc, for the construction of Apapa-Oworonshoki-Ojota road in Lagos and the Lokoja-Obajana-Kabba road connecting Kogi and Kwara States in the country’s north-central region.
Julius Berger handled the construction of the two federal roads, while Dangote Cement Plc provided the funds.
The credit certificates issued to Dangote is a waiver to cover the tax that Dangote Cement would have paid.
The tax credit for the Apapa-Oworonshoki-Ojota expressway was valued at N21.6 billion while that of the Lokoja-Obajana-Kabba expressway was N721 million.
The FIRS had earlier in 2019 awarded a N9.5 billion tax credit to Dangote for the Lokoja-Obajana-Kabba road construction.
