Lafarge ReadyMix Nigeria Limited, a subsidiary of Lafarge Africa Plc, and Fortis Microfinance Bank, one of Nigeria’s fastest growing microfinance institutions, recently entered into a strategic partnership expected to pave way for the construction of affordable housing units for low income earners.
Expectation is high also that this partnership would lead to a significant drop in house prices, especially in Abuja, the Federal Capital Territory where it is hoped that Fortis would build 500 homes in the first six to 12 months.
“Our key performance agreement for the contract is to produce about 500 homes for beneficiaries through a N600 million expenditure within a period of six months from the date of project commencement”, Tiko Okoye, Fortis’s MD/CEO, explained to BusinessDay.
Continuing, Okoye said, “if you divide that amount by the number of houses, you will have a fair idea of what one individual will be getting and you will see whether that this cannot give you a house in Nigeria under normal circumstances. You will also understand the massive discount we are talking about leveraging on Lafarge”.
The Federal Mortgage Bank of Nigeria (FMBN) estimates that the average cost of an affordable home in Nigeria is N3.5 million, but with the discount being offered by the Fortis-Larfage initiative, house prices would range from N1.2 million to about N3 million, leading to a possible crash in the prices of homes in and around the FCT where rents remain high with a good number of fully completed estate homes still unoccupied. “Fortis has the building sites and what we bring to site is technical advice to the consumer; we help him build the house; advise him on good construction practices and on handling of contractors; so we are actually informing the builder of how to build a better home at a much reduced price, thanks to the cooperation of Fortis and Shelter Afrique,” Loren Zanin, CEO, Lafarge’s Aggregates and Concretes, said.
Ugochukwu Ezeh, executive director, business development at Fortis, explained to BusinessDay that the project was coming on the back of a facility they were accessing from Shelter Afrique in Kenya, describing Shelter Afrique as “a lender that tries to support governments in developing mass housing projects, and specifically for micro-housing which is synonymous with affordable housing,”
“It is such housing that we want to make available to Nigerians. For us in the micro finance business, we have a social mission and that is part of poverty alleviation by taking people out of that social bracket.” Adewale Aderounmu, the bank’s chief marketing officer, said the initiative gained traction on the back of the recent national license that was granted to Fortis by the Central Bank of Nigeria (CBN), adding that the choice of Lafarge was based on their experience and pedigree in the construction industry, both in Nigeria and internationally. “By the reason of this MoU, we expect Shelter Afrique to begin to provide us with some technical assistance, and in the course of this, remove some cost elements of the project which we could otherwise have paid for, thereby making the houses more affordable,” Aderounmu said.
“We are going to kick off from Abuja in the days ahead, and with the CBN national license, we expect to go across the country but we will go one step at a time after starting off in the satellite towns around the FCT,” he added.