The real estate sector contributes between 30 to 70 percent of economic activities in the U.K, Canada and USA with investment in housing accounting for 15 to 35 percent of aggregate investment worldwide, creating jobs for about 10 percent of the global labour force.

In Nigeria, it accounts for only 3 percent of GDP.  Nigeria has a housing deficit of 17 million houses with an estimated 1 million units needed annually to cater for its housing paralysis.  Lack of affordable and accessible mortgage facilities have made home ownership elude millions of Nigerians.

The Land Use Decree enacted in 1978 which vests ownership of land under the sole control of state government for non resource land has not been reviewed 41 years later, while government policies on land and property acquisition have also discouraged huge investments to boost the sector.

Kaduna State Government in order to deepen access to affordable housing in the state passed the Mortgage and Foreclosure Law, and established Kaduna State Mortgage and Foreclosure Authority making it the first state in Nigeria to create a mechanism to resolve issue of default in the real estate industry. It is digitizing land documentation and titling to attract private sector investment.

Kaduna has established strategic partnerships with Sterling Bank to provide single digit interest mortgages to its citizens and Nigerian Mortgage Refinance Company as well as the Federal Mortgage Bank to jointly commit 3 billion naira for affordable mortgage.

These initiatives are aimed at enabling its citizens to buy houses and pay over 15 to 20 years with single digit interest rates.

Mixta Nigeria, a subsidiary of Pan African real estate developer Mixta Africa has introduced an innovative option to deepen home ownership for Nigerians. To save Nigerians the stress of buying land and due to financial constraints it is undeveloped after about four to five years, it is offering a buy home to rent policy which will give customers who would purchase homes from them and don’t wish to reside there an option of putting it for rent.

According to Kola Ashiru Balogun, CEO Mixta Nigeria once they get a commitment from an investor who buys into their scheme, they look out for tenant willing to rent the property and through this initiative in 2019, they have sold over a 100 units. Besides the returns on investment for the property owner, Mixta provides access to the National Housing Fund for anyone who buys into this initiative with only a down payment of 10 percent of the total value of the property required while the balance will be mortgaged and based on the number of years rent will be earned monthly by the landlord.

It has begun development of properties for the same value as the cost of land catering to different classes of people in Nigeria offering from 13.5 million naira for its Beachwood Park Estate in Lekki for a two bedroom terrace house, and 16 million naira for a three bedroom semi detached house, a game changer considering the average value of similar properties within that axis.

First Homes Africa, a startup wants to make it convenient for first time homeowners to own its 60,000 targeted apartments within four years through a rent to own policy that allows subscribers to save monthly for 15 months to own homes in any location of their choice.

It has created an ecosystem which comprises stakeholders in the housing sector value chain such as the government, insurance companies, property developers and builders, building materials manufacturers, and built environment professionals.

Utilizing technology tools such as cloud computing, big data, predictive analytics, artificial intelligence, mobile technology and social networks, it plans to redesign the housing industry by building houses to suite millennials eliminating the waste typically associated with housing design and development.

First Homes Africa should focus on delivering single room or self contained apartments at scale as there is a rising demand for this amongst its target market across the country due to low disposable income in Nigeria which has made young millennials prefer affordable housing options due to the harsh economic climate of the country. It should create a blockchain platform which will enable digital records of all its assets, home mortgages and payments, insurance for all parties in its network which will promote transparency and trust in delivering last mile home ownership for all Nigerians.

According to Nigeria’s Ministry of Industry, Trade and Investment, there are over 37 million SMEs (small and medium enterprises) who account for over 70 percent of jobs created in the country, and about 48.5 percent of GDP, and about 7.27 percent of goods and services in export earnings. Of this number, micro-enterprises account for the bulk of MSMEs (micro small and medium enterprises)in Nigeria at 36,994,578 with small businesses 68, 168 and medium enterprises at 4,670.

The International Finance Corporation posits that 65 million enterprises or 40 percent of formal micro small and medium enterprises in developing countries have a finance friction of $5.2 trillion annually equivalent to 1.4 times the current level of global MSME finance. Nigeria’s total potential SME finance demand is $158 billion. Of this amount only a pittance of $101 million is the current available finance supply representing a meagre 0.06 percent of the total potential finance according to the IFC. In comparison to her African peers South Africa with $41 billion, Kenya $3.9 billion, Ghana $2.7 billion, Angola $2.7 billion and Mauritius $2.4 billion, Nigerian SMEs are starved of funding to help them become competitive. The funding gap between SME finance demand and supply in developed markets is equivalent to about 3 percent of GDP according to Allianz while in developing markets it is 18 percent of GDP resulting in $4.8 trillion in under funding according to the International Finance Corporation.

The Development Bank of Nigeria, a wholesale development finance institution, was established to provide long term financing and partial credit guarantees to eligible financial intermediaries for lending to SMEs. As at May 2019, the Development Bank of Nigeria’s has disbursed $243.7 million to primary financial institutions for lending to MSMEs with about 50,000 beneficiaries, 70 percent of which are women through 7 commercial banks and 10 microfinance banks.

The following pillars are essential for the sustainability of enterprises and their growth. They include

• Access To Infrastructure: Nigeria has an infrastructure paralysis in the energy, transportation, communication, housing, etc which affects operations of small businesses as they are forced to do business with alternative power supply which leads to an increase in the cost of production for their goods and service delivery. These make them non competitive as they compete with foreign cheaper similar products.
• Access To Talent: Nigeria has a human capital deficit with about 23 percent of her citizens unemployed, as her educationally institutions do not produce graduates who have skills needed for the labour market. These affect the cost of operations for SMEs as they are forced to outsource some of their jobs while others spend to retrain fresh hires with skills necessary for them to work in the enterprises.
• Capacity Building: SMEs in Nigeria are faced with a deficit in capacity needed for them to scale their enterprises to become successful as most of them lack updated skills and resources for them to succeed in the marketplace locally and globally.
• Policy and Regulation: Inconsistent government policies and multiple taxation by the various levels and agencies of government affect the cost of doing business for SMEs. These  make it difficult for them to succeed as most of them don’t survive beyond the first five years as a result of this.
• Access To Resources: SMEs lack access to technological, financial, networks and other resources which are necessary for them to succeed in Nigeria.
• Access To Market: Most SMEs in Nigeria are constrained by lack of access to their markets of operation due to lack of support from government, large organizations for collaboration and the network effect, dampening their chances of scaling up to succeed.
• Access To Finance: Compared to developed countries which have large access to funding from banks, large organizations who they act as distributors of their products who provide finance for them to keep their businesses afloat and venture capital for startup companies, Nigerian SMEs suffer from a scarcity of available funding to make them successful.

First Bank of Nigeria, the premier financial institution in the country has intervened to provide an arm of support to SMEs in Nigeria as it believes they are critical to the economic growth and development of Nigeria. It has provided the sum of 170.30 billion up to date as credit facility to various SMEs, supporting  about 70703 various small and medium businesses.

First Bank also believes in deepening SME’s capacity to help them scale up their operations with the aid of technology, and established a collaboration with Microsoft to provide its technology solutions, at an affordable rate for over 40 million Nigerian SMEs. Also, they can purchase Microsoft solutions in naira and gain access to after sales support on the products.

For all the solutions from Wragby, the SME Productivity which makes it possible for SMEs to purchase Microsoft solutions in Naira, and in piecemeal, is superb. Software accelerates productivity, and by making it easier for companies to have access to productivity tools, Wragby is powering efficiency across sectors and markets in the nation.

First Bank should establish economic clusters and co-working spaces with shared state of art infrastructure across the six geopolitical zones which will help SMEs and startups reduce their barriers to entry for market success.