As one of the keynote speakers at the 4th annual West Africa Property Investment Summit, Dr. Andrew Nevin, Partner and Chief Economist for PwC Nigeria shared high level insights ahead of the region’s leading property investment conference taking place on 15 & 16 November at the Eko Hotel, Lagos. Featuring more than 90 speakers and 500 delegates from over 200 companies, #WAPI2018 will set the agenda for West Africa’s real estate’s executives.
As a respected regional and global authority on Nigeria and West Africa, Dr. Nevin’s presentation is titled: THE GLOBAL VIEW ON GEOPOLITICS, OIL & MACRO-ECONOMICS: How are these impacting investment in West African Real Estate?
In an increasingly volatile world (Trump, China, Turkey and more), emerging markets have been significantly impacted. But the question which Dr. Nevin, will help Nigeria’s executives answer is how volatility, government policy and oil will impact investment and development in Nigeria?
Why is Real Estate fundamental to growing an economy?
Real estate makes up 60% of the world’s global assets and in developed countries, real estate buttresses the financial sector, enabling for the creation of asset backed loans and securities. Nigeria’s real estate system cannot work without a proper land registry; banks cannot lend against a property without evidence of ownership. The current land titling system is onerous and excludes many people from formal ownership. Based on these facts, real estate is one of the most critical sectors that if reformed will propel growth and alleviate poverty in Nigeria.
Global volatility and the local Real Estate Market?
Foreign exchange and inflation have stabilized in Nigeria amid emerging market pressures. However, crude reliance continues to leave Nigeria vulnerable to external shocks. This creates persistent uncertainty for investors in Nigeria, which is affecting all sectors in the economy, including real estate.
In urban areas, commercial real estate occupancy has declined as a result of low demand in an underperforming economy. Consequently, office rent has declined by 20% over the last 3 years in the high-end market , while co-working spaces are becoming more popular, consistent with the growing number of tech start-ups and entrepreneurs.
In the premium residential market, demand has shifted to less expensive semi-detached houses and apartments. There is also persistently huge demand for affordable housing in Nigeria. Nigeria’s population is set to exceed 250 million people by 2030 (roughly 50 million households), and by 2025, our housing deficit will be approximately 20 million . We are not building enough houses for people to live in.
Global volatility has increased the oil price, which has benefitted the immediate public sector coffers, but is this a good thing? Some have argued that a lower oil price will drive economic reform, but won’t $70 – $80 oil keep reform at bay?
The economy is benefitting from rising oil prices. The reality is that Nigeria requires capital to invest in critical sectors and fund long-term structural changes. Over the last three years, we have seen government debt grow from 12% of GDP in 2015 to 20% in 2017. A further indication of the high demand for government revenue is the Voluntary Asset and Income Declaration Scheme (VAIDS), which was implemented to grow tax revenue.
Failure to diversify the economy is a result of bad policies and poor implementation of good policies. Oil prices have fluctuated since the first quarter of 2016 (over 2 years ago) and we still have not achieved a diversified economy. There is no reason to believe that persistently low prices in the future will make this happen.
How have macro-development factors impacted the real estate sector – has there been less transactions, or investment, and has Nigeria bucked the trend?
The real estate sector has not seen positive growth since the start of the recession in 2016. The sector continues to lag behind overall growth, recording a growth rate of -3.88% in the second quarter 2018. Nevertheless, this is an improvement from the -9.4% growth of the preceding quarter.
The tight monetary environment – high interest rates and currency restrictions – are huge contributors to the slow growth in the real estate sector. Heavy government borrowing has crowded out the private sector, making it difficult to investors to finance the capital-intensive projects of the real estate sector. This issue reinforces the need for the government to undertake structural reforms that will improve capital stock and business environment.
If we look further ahead to 2019 – what are the major concerns going to be?
The 2019 elections will revolve around the economy. There is growing frustration over slow growth, high unemployment, low liquidity and poor infrastructure. Foreign investors who
have low confidence in the economy are also keeping close watch. Thus, the election outcome will have some effect on Nigeria’s economic health in the short run.
Over the last year, the ease of doing business has risen 25 places to rank 145 out of 190 countries, however, the absence of major reforms in infrastructure, power and land ownership will ultimately stifle advancements in improving the business environment in the long run.
Where do you see the investment case for Nigeria and the region in the next 12-18 months, and do you think we are about to see a continued growth curve?
In the absence of sweeping structural reforms, Nigeria will continue to experience slow growth through 2022. The critical takeaway here is that income per capita will decline each year over the next five years as population growth exceeds GDP growth, if no action is taken. Investor confidence will be largely determined by the elections and the ongoing security situation in Nigeria.
To register for West Africa’s largest real estate event, visit www.WAPISummit.com/register as seats are limited.
Election shift: I’m deeply disappointed with INEC —Buhari
President Muhammadu Buhari has expressed deep disappointment over the postponement of the presidential and National Assembly polls by the Independent National Electoral Commission.
The President lamented that, despite giving all the necessary support to the electoral umpire, the exercise was postponed just hours to voting and after Nigerians had taken the pains to travel to vote.
“I am deeply disappointed that despite the long notice given and our preparations both locally and internationally, the Independent National Electoral Commission postponed the presidential and National Assembly elections within hours of its commencement,” Buhari said in a statement he signed on Saturday morning in Daura, Katsina State.
However, he asked INEC to ensure the safety of election materials already distributed and appealed to Nigerians to remain law abiding.
Buhari also stated that he had decided to relocate to Abuja from Daura to ensure that the meeting INEC called to hold with stakeholders was successfully.
His statement reads further, “We now urge INEC to ensure not only that materials already distributed are safe and do not get into wrong hands, but that everything is done to avoid the lapses that resulted in this unfortunate postponement, and ensure a free and fair election on the rescheduled dates.
“While I reaffirm my strong commitment to the independence, neutrality of the electoral umpire and the sanctity of the electoral process and ballot, I urge all political stakeholders and Nigerians to continue to rally round INEC at this trying national moment in our democratic journey.
“I, therefore, appeal to all Nigerians to refrain from all civil disorder and remain peaceful, patriotic and united to ensure that no force or conspiracy derail our democratic development.”
Source: Punch Newspaper
President Buhari’s statement on postponement of elections by INEC
STATEMENT BY PRESIDENT BUHARI ON THE POSTPONEMENT OF GENERAL ELECTIONS BY INEC
I am deeply disappointed that despite the long notice given and our preparations both locally and internationally, the Independent National Electoral Commission (INEC) postponed the Presidential and National Assembly elections within hours of its commencement.
Many Nigerians have traveled to various locations to exercise their right to vote, and international observers are gathered.
INEC themselves have given assurances, day after day and almost hour after hour that they are in complete readiness for the elections. We and all our citizens believed them.
This administration has ensured that we do not interfere in any way with the work of INEC except to ensure that all funds were released to the commission.
We now urge INEC to ensure not only that materials already distributed are safe and do not get into wrong hands, but that everything is done to avoid the lapses that resulted in this unfortunate postponement, and ensure a free and fair election on the rescheduled dates.
While I reaffirm my strong commitment to the independence, neutrality of the electoral umpire and the sanctity of the electoral process and ballot, I urge all political stakeholders and Nigerians to continue to rally round INEC at this trying national moment in our democratic journey.
I, therefore, appeal to all Nigerians to refrain from all civil disorder and remain peaceful, patriotic and united to ensure that no force or conspiracy derail our democratic development.
I have decided to move back to Abuja to ensure that the 14.00 hrs meeting called by INEC with all stakeholders is successful.
Daura, February 16, 2019
Election postponement: I’m disappointed….Balarabe Musa
Former Kaduna State Governor, Balarabe Musa, on Saturday expressed disappointment over the postponement of the general elections, but declared that INEC was never prepared for the exercise in the first place.
INEC had announced the postponement a few hours to the kickoff of the February 16 presidential and National Assembly polls.
Chairman of INEC, Prof. Mahmood Yakubu, while announcing the postponement in Abuja, attributed the step to “overwhelming logistics and operational challenges.”
The Commission fixed February 23 and March 9 as new dates for the presidential and National Assembly elections; and the governorship and state Assembly polls respectively.
But Musa, in an interview with the News Agency of Nigeria in Kaduna on Saturday, said he was disappointed, but not surprised, at the development.
“I am not surprised because INEC was never ready for the exercise, given the level of its preparations.
“INEC had serious funding challenges; what was appropriated to the Commission by the National Assembly was not adequate and everyone knew it.
“We are not even sure if the approved amount was released to the electoral body by the Federal Government.
“The logistics and operational challenges are glaring. There are also serious security challenges that may affect the agency in the course of the elections.
“The security services are facing the same funding crises and most of them are living in fear.
“You can also see the serious challenges being faced by the Judiciary, who are supposed to play a major role in the election process,” Musa said.
“So, I must say that I am disappointed; but, again, as I said, I am not surprised. I hope that all the stakeholders will take the necessary measures to help INEC address the issues before February 23, the new date for the presidential polls, because the President can only hand over power to an elected person.”
Musa called on Nigerians to remain calm as they prepare towards the new dates for the polls.
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