Urban housing affordability and housing policy dilemmas in Nigeria

450 Pages·2009·4.44 MB·English

by  Ndubueze, Okechukwu

URBAN HOUSING AFFORDABILITY AND HOUSING
POLICY DILEMMAS IN NIGERIA

by

OKECHUKWU JOSEPH NDUBUEZE

A thesis submitted to the University of
Birmingham for the degree of
DOCTOR OF PHILOSOPHY

Centre for Urban and Regional Studies
School of Public Policy
The University of Birmingham
January 2009
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ABSTRACT
Given the increasing importance of affordability in housing policy reform debates, this study
develops a new composite approach to measuring housing affordability and employs it to examine
the nature of urban housing affordability in Nigeria. The data used in this study are based on the
Nigerian Living Standards Survey 2003-2004.
The aggregate housing affordability model developed here measures housing affordability
problems more accurately and classifies the housing affordability status of households more
appropriately than the conventional affordability models. Findings show very high levels of
housing affordability problems in Nigeria with about 3 out of every 5 urban households
experiencing such difficulties. There are also significant housing affordability differences between
socio-economic groups, housing tenure groups and states in Nigeria.
The current national housing policy that de-emphasises government involvement in housing
provision does not allow the country’s full potential for tackling its serious affordability problems
to be realised and, hence, the laudable ‘housing for all’ goal of the policy has remained elusive.
Nigerian socio-economic realities demand far more vigorous government involvement in housing
development, working with a more committed private sector, energised civil societies and
empowered communities to tackle the enormous housing problems of the country.
DEDICATION

This work is dedicated to Irma, Eche and Jide whose love has been unconditional including
my wonderful parents Chief & Mrs. Innocent and Victoria Ndubueze who have borne my
burden over so many years without reminding me!
ACKNOWLEDGEMENTS
At the end of this rather very long journey that in fact started much earlier than the very first draft
proposal of this study, writing this acknowledgement is nostalgic and sort of an anti-climax. It is
rather a poor attempt to express the depth of my gratitude to those who contributed in different
ways to make the successful completion of this study possible. There were those who were
directly involved with the actual development of this work and those who had to put up with me
through its long duration.
I am indebted to my supervisory panel Rick Groves, Chris Watson, Ed Ferrari (second
Supervisor) and Bruce Walker for providing me with both the constructive guidance and the
freedom to develop my ideas in equal measures. Their unrelenting understanding, support, patient
and kindness went beyond the demands of basic thesis supervision, which helped to pull me
through some very difficult periods of family health crises – it has been a privilege working with
you. I am especially grateful to Bruce Walker who was the last to join the team at the most critical
phase of the study (in my third year) and enthusiastically took over the role of lead Supervisor. His
painstaking proofreading of my drafts, critical comments and generous editorial inputs improved
the content and form of this thesis.
I am grateful to CURS for granting me the Barbara M.D. Smith, fellowship and the Pat Cam
fellowship awards in my third year of research that sustained the study and ensured its completion.
These awards greatly eased the financial burden of undertaking this study and facilitated my active
participation in the 2007 International Conference of the European Network of Housing
Researchers (ENHR) in Rotterdam. The credit for my securing these awards goes entirely to my
supervisory panel especially Chris Watson and Rick Groves both of whom I will remain indebted.
I am also very grateful to receive the assistance and encouragement of various renowned experts
in wide range of rigorous quantitative techniques considered in this study. Prominent amongst
them includes; Professor Svante Wold of Umeå University Sweden, Professor Caltaldo Zucarro of
de Université du Quebec à Montréal, Canada, Professor Jon Rasbash of the centre of Multilevel
modelling, University of Bristol, Professor Ann Harding and Dr. Simon Kelly of the National
Centre for Social and Economic Modelling, University of Canberra, Australia and Dr. Cathal
O’Donoghue, Economics of Social Policy Research Unit, National University of Ireland.
I am indebted to Boniface Amobi of the Bureau of Statistics, Nigeria who provided me with most
of the data and relevant Nigerian Living Standards Survey 2003/04 support documents used in
this study and also grateful to Victor Onyebueke for sending to me needed housing policy
documents from Nigeria. I am also indebted to Richardson Okechukwu and Tunrayo Alabi of the
International Institute of Tropical Agriculture, Ibadan, Nigeria who provided to me the
appropriate digital map of Nigeria that was used in this study after several frustrating attempts to
acquire such a map from other sources. My brief encounter with you was yet another privilege
experience that reminded me of the generous integrity of Nigerians.
I will remain grateful to Professor H.C. Mba of University of Nigeria, Enugu Campus who in
many ways is my intellectual mentor for providing some of the latent inspiration for this work, he
may never realise just how much he contributed to this work. There were also Professor Chibuike
Uche and Professor Keneth Omeje who were amongst the first to comment on the earliest draft
proposal of this study in 2001 and have over the years persistently encouraged and inspired me to
complete this work.
For Dr. Ricky Joseph, Dr. Alhadi Altayeb, Dr Shinwon Kyung, Dr. Jayakody Mervyn and Zahira
Latif, at CURS, University of Birmingham – thanks for those stimulating discussions and shared
experiences. I am especially grateful to Sue Truman for facilitating the administrative
infrastructure that was crucial to the successful completion of my study at CURS.
I have also cherished the friendship, inspiration and support I found at the Institute of Social
Studies (ISS), The Hague, The Netherlands with Dr. Erhard Berner, Dr. Nicholas Awortwi, Dr.
Georgina Gomez, Dr. Admasu Shiferaw, Dr. Dan Oshi, John Agbonifor, Lupe Nunez, Els
Mulder and Ibrahim Farouk.
This study necessitated my making demands which sometimes have been “unfair” to some of my
closest family, friends and associates, which ranged from negligence of my responsibilities to long
absence and withdrawal. This was the group that had to put up with me and I am grateful that I
have been fairly tolerated by you all. Amongst this group includes Victor Ekugun, Muyiwa
Kolawale, Donatus Okafor, Nwabueze Nkenke, Obinna Anumba and Kerryan Bailey who at
various times generously offered me temporary accommodation when needed and largely made
my stay in the United Kingdom a pleasant experience. Others that deserve special mention here
include Rev. Dr. Antony Njoku and Mike Ugwu two of whom have been there from the begining.
Others will include; Anne Beyers, Dr. Emmanuel Omanukwue and Anna-Christine de Man,
Iheanyi Ndubueze, Chinweuba Ndubueze, Njideka Ndubueze, Hardin Jonker-Zwarteveen, Pa and
Ma Zwarteveen and Okechukwu Nwagbara whose constant support provided additional impetus
to carry on.
My deepest gratitude goes to my wife Irma and of course Eche and Jide without whose loving
support this work would neither have started nor be completed. How can I forget the several
times I had to carry Jide with my right arm while I type this thesis with the left nor Eche who
would rather have us playing when I need to really concentrate on this work. Their loving
demands kept reminding me of the need to finish this thesis ‘as soon as possible.’
To my parents whom have been wonderful to me in every way, I owe an enormous measure of
irredeemable debt. My little successes and achievements are in a way theirs also for I carry their
dreams and aspirations and more importantly the opportunities that were only made possible by
their sacrifice and hard work. I couldn’t have asked for more.
In the end, words will always be inadequate in thanking God for his blessings and for making
everything possible.
CONTENTS

Page
Abstract
Dedication
Acknowledgements
Contents...............................................................................................................................i
List of Figuresv....................................................................................................................i
List of Tables...................................................................................................................viii
List of Abbreviations..........................................................................................................xi

1. INTRODUCTION 1

1.1 Background of Study....................................................................................................................1
1.2 Statement of Problem..................................................................................................................4
1.3 Goals of the Study........................................................................................................................7
1.3.1 Objectives of Study.......................................................................................................................9
1.4 Broad Research Questions and Research Hypothesis...........................................................9
1.5 Methodology................................................................................................................................10
1.5.1 Secondary Data............................................................................................................................10
1.5.2 Quantitative Analytical Techniques Used in the Study........................................................11
1.6 Scope of Study.............................................................................................................................12
1.7 Limitations of Study...................................................................................................................13
1.8 Significance of Study..................................................................................................................15
1.9 Structure of the Thesis...............................................................................................................16

2. THE NIGERIAN NATIONAL HOUSING POLICY CONTEXT 19

2.1 Introduction.................................................................................................................................19
2.2 Geo-political Structure and Urbanization Trend in Nigeria...............................................19
2.3 The Changing Thinking in the International Housing Policy Discourse.........................22
2.4 The Nigerian Housing Sector...................................................................................................24
2.4.1 Brief Historical Trends of Housing Programme and Policy Reform in Nigeria............24
2.4.2 Public Sector Housing................................................................................................................27
2.4.3 Private Sector Housing..............................................................................................................34
2.5 Contradictions and Challenges in Framing the Nigerian National Housing
Policy ..........................................................................................................................................39
2.5.1 The Enabling Approach to Shelter Provision.......................................................................40
2.5.2 Private - Public Partnerships.....................................................................................................44
2.5.3 Enabling Markets to Work........................................................................................................47
2.5.4 Improving Access to Housing Inputs.....................................................................................51
2.5.5 Supporting Small-scale and Community-based Housing Production...............................57
2.5.6 Social Housing Production........................................................................................................58
2.6 The Current Dilemma................................................................................................................59
2.7 The Policy Dilemma as A Motivation for the Study............................................................61

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3. THE DEBATE ON STATE VERSUS MARKET IN HOUSING
PROVISION 63

3.1 Introduction.................................................................................................................................63
3.2 Public Interest Economic Regulation Theory.......................................................................64
3.3 Theory of Distributive Justice..................................................................................................68
3.3.1 Rawls Difference Principle of Distributive Justice...............................................................72
3.3.2 Welfare-Based Principles...........................................................................................................74
3.4 The Inherent Need for Government Involvement in Housing Delivery........................77
3.4.1 The Distinct Nature of Housing..............................................................................................78
3.4.2 Housing Externalities.................................................................................................................81
3.4.3 Income and Wealth Inequality..................................................................................................86
3.4.4 Fairness and Social Stability Considerations..........................................................................87
3.4.5 Stimulate Economic Growth....................................................................................................89
3.5 Market vs. Non-Market Contention in Housing Provision................................................91

4. HOUSING AFFORDABILITY: A REVIEW OF LITERATURE 100

4.1 Introduction..............................................................................................................................100
4.2 Defining Housing Affordability............................................................................................100
4.3 The Significance of Housing Affordability.........................................................................104
4.4 Measures of Affordability.......................................................................................................111
4.4.1 Housing Cost Approach.........................................................................................................111
4.4.2 Basic Non-housing Cost Approach......................................................................................118
4.4.3 Quality Adjusted Approach...................................................................................................122
4.4.4 Housing Affordability Gap / Mismatch Approach...........................................................124
4.5 Towards a Composite Approach..........................................................................................126
4.6 The Focus of Existing Housing Affordability Research..................................................129
4.7 Review of Existing Housing Affordability and Related Literature on Nigeria.............132
4.8 Summary of Major Findings from the Review of Existing Relevant Literature..........136

5. RESEARCH METHODS AND PROCEDURES 139

5.1 Introduction..............................................................................................................................139
5.2 Detailed Research Questions.................................................................................................143
5.3 Detailed Research Hypotheses..............................................................................................141
5.4 Data Type and Source.............................................................................................................142
5.5 Initial Generation and Presentation of Relevant Data......................................................143
5.5.1 Generation of Secondary Variables......................................................................................144
5.5.2 Rent / Housing Expenditure Variables...............................................................................144
5.5.3 Non-Housing Household Expenditure Variables.............................................................150
5.5.4 Household Income Variables................................................................................................157
5.5.5 Urban Residential Housing Quality Variable......................................................................164
5.5.6 Socio-Economic Group Variable.........................................................................................169
5.5.7 Basic Descriptions of the Detailed Socio-Economic Groups in Nigeria......................176
5.5.8 House-Type Groups................................................................................................................181
5.5.9 Housing Tenure Group Variable..........................................................................................183
5.6 Summary of Chapter...............................................................................................................186
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6. SYNTHESISING AND EVALUATING THE AGGREGATE HOUSING
AFFORDABILITY INDICES 187

6.1 Introduction..............................................................................................................................187
6.2 Generation of Shelter Poverty (SP) Index...........................................................................187
6.2.1 Intensity of Shelter Poverty....................................................................................................190
6.3 Generation of House-Expenditure-to-Income (HEI) Affordability Index..................194
6.3.1 Intensity of Housing Expenditure to Income Affordability Problems.........................198
6.3.2 Comparing the Housing Affordability Classification of Households of the
Shelter Poverty and the Housing Expenditure to Income Affordability Index...........200
6.4 Generation on Aggregate Housing Affordability Index...................................................201
6.4.1 Application of the PLS Regression Model in Developing the Aggregate
Housing Affordability Index..................................................................................................205
6.4.2 The Actual PLS Regression Analysis and Results..............................................................208
6.4.3 Fitting the Aggregate Housing affordability Model...........................................................213
6.4.4 Diagnostics Plots (The Normal Probability Plot and the Histogram Test)..................219
6.4.5 Housing Affordability Classifications of Household Using the
Aggregate Affordability Index...............................................................................................220
6.5 Examining the Classifications of the Aggregate Housing Affordability Model...........222
6.5.1 Households that Do Not have Housing Affordability Problems.................................222
6.5.2 Households with Housing Affordability Problems..........................................................223
6.5.3 Group Whose Housing Affordability Problem Status Classification by Housing
Expenditure to Income Model was Rejected by the Aggregate Model.........................225
6.5.4 Households Whose Housing Affordability Problem Status Classification by
Shelter Poverty Model was Rejected by the Aggregate Model........................................226
6.5.5 Households Whose Joint Identification by both Shelter Poverty and Housing
Expenditure to Income Models were Rejected by the Aggregate Model ....................228
6.6 Major Characteristics of the Different Aggregate Housing Affordability
Quintile Groups in the Study Area.......................................................................................231
6.6.1 Matching the Household Income of the Quintile Groups against Housing
Affordability..............................................................................................................................232
6.6.2 Matching the Housing Expenditure of the Quintile Groups Against
Their Housing Affordability..................................................................................................234
6.6.3 Matching the Housing Quality of the Quintile Groups Against Their Housing
Affordability..............................................................................................................................236
6.6.4 Matching the Non-housing Consumption Expenditure of the Quintile Groups
Against Housing Affordability...............................................................................................237
6.6.5 Matching the Household Size of the Quintile Groups Against Their Housing
Affordability..............................................................................................................................238
6.7 Some Insights into the Nature of the Housing Markets in the Study Area..................239
6.8 Summary of Key Findings......................................................................................................240

7. EXPLORING THE AGGREGATE HOUSING AFFORDABILITY OF
DIFFERENT SOCIO-ECONOMIC GROUPS, TENURE GROUPS
AND STATES IN NIGERIA 243

7.1 Introduction..............................................................................................................................243

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