Ministry of Housing & Urban Development Plans Visionary Cross-Subsidization Initiative to Boost Inclusive & Affordable Housing
The Ministry of Housing and Urban Development has revealed plans to introduce a groundbreaking initiative aimed at revolutionizing inclusivity and affordability in Nigeria through the introduction of cross subsidies in housing projects.
This visionary strategy, championed by the Honorable Minister of Housing and Urban Development, Arc. Ahmed Musa Dangiwa, promises to redefine housing accessibility by integrating a mix of low, medium, and high-end housing projects, ensuring inclusivity for Nigerians of all income brackets.
Arc. Dangiwa, unveiled this innovative approach while reviewing affordable housing options presented by the Ministry’s Affordable Housing Building Design Committee. The Minister had established the Committee during his first week in office to review designs of Ministry’s projects and ensure that houses that the Ministry promotes fall within price-ranges that low- and medium-income earners can afford.
The revised designs featured several cost-saving changes including organic one one-bedroom bungalows to lower cost of purchase while allowing beneficiaries the latitude to expand to two and three-bedrooms as his income increases, optimized space management, smart roofing techniques and basic internal finishings amongst several others.
In his remarks, Arc. Dangiwa commended the Design Team for their creativity. He also emphasized the necessity of embracing innovative concepts like cross subsidies to counter the challenges posed by inflation, the soaring costs of building materials, which have led to an increase in planned house prices.
"I am impressed with the work that the Affordable Housing Design Team has accomplished, thus far, in reducing the cost of houses that we plan to promote so that all Nigerians can benefit. While there is progress, the escalating cost of building materials has almost taken off all the savings from the revised designs. For us to achieve our goals, we have to think out of the box and embrace creative solutions. This is why we plan to work out a comprehensive framework for introducing cross subsidies in projects delivered through Public Private Partnerships and the agencies under the Ministry," stated Arc. Ahmed Dangiwa, the Minister of Housing and Urban Development.
He explained that cross subsidies are important policy tools used by governments and urban planners to address housing affordability issues and promote inclusive urban development.
He added that the approach involves redistributing the costs and benefits of housing development across different income groups. “The reality of the affordable housing debate is that many civil servants and other Nigerians working in the public sector cannot even afford a decent mortgage with their salaries. Our mechanism will be to promote market-based prices for high end developments to those who can afford it, thereby subsidizing housing costs for lower-income households.”
The Ministry's vision for implementing cross-subsidy is rooted in a commitment to social equity and inclusive urban development. By strategically channeling profits from high-end housing projects, the Ministry aims to promote a housing landscape where every citizen, regardless of income, finds a place to call home. This approach is not merely about constructing houses; it's about fostering communities where opportunities are equal, and prosperity knows no bounds.
Arc. Ahmed Dangiwa further elaborated on the Ministry's ambitious objective: "We are not driven by profit but the desire to ensure that all Nigerians have access to decent and affordable housing. Through cross-subsidy, we aspire to create a blueprint for a harmonious society, ensuring that the benefits of growth are shared by all. We are transforming the dream of affordable housing into a tangible reality for our citizens."
About Cross Subsidies for Housing:
Housing projects are designed with a mix of units catering to varying income levels. Market-rate units are priced higher, often reflecting the actual cost of construction and profit margins for developers. Within the same project, a certain percentage of units are allocated as affordable housing. These units are sold or rented at prices significantly lower than the market rate. Revenues generated from the market-rate units subsidize the construction and maintenance costs of affordable units. This subsidization allows lower-income families to access housing at a reduced cost.
Cross subsidies ensure that diverse income groups can reside within the same community, promoting social integration and preventing the formation of economically segregated neighborhoods.
