The Ministry's New Approach: Introducing Cross Subsidies in Housing Projects
Following a comprehensive review of past efforts aimed at reducing deficits, the Federal Ministry of Housing and Urban Development has unveiled a novel initiative, named the "cross subsidies in housing projects." This initiative is designed to ensure that homes in the country are both inclusive and affordable.
Under this innovative scheme, housing projects will be meticulously planned to encompass a mix of housing units catering to a wide range of income levels. The market-rate units will be priced higher, reflecting the actual cost of construction and profit margins for developers. Simultaneously, within the same project, a designated percentage of units will be allocated as affordable housing.
These affordable units will be available for purchase or rent at significantly lower prices than the prevailing market rates. The revenues generated from the market-rate units will then subsidize the construction and maintenance costs of the affordable units. This critical subsidization will enable lower-income families to access housing at a reduced cost, promoting greater inclusivity.
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The concept of cross subsidies in housing projects stems from the recommendations of the ministry's Affordable Housing Building Design Committee. This committee was established by the Minister of Housing and Urban Development, Ahmed Dangiwa, during his first week in office. Its objective was to review the designs of the ministry's projects and ensure that the houses promoted by the ministry fall within price ranges that are affordable for low- and medium-income earners.
The revised designs include various cost-saving modifications, such as organic one-bedroom bungalows with the flexibility to expand to two or three bedrooms as income increases. They also incorporate optimized space management, smart roofing techniques, and basic internal finishing, among other improvements.
This groundbreaking strategy promises to transform housing accessibility by integrating a mixture of low, medium, and high-end housing projects, thereby promoting inclusivity for Nigerians from all income brackets. Minister Dangiwa commended the design team for their creativity during his review of the committee's affordable housing options.
He also emphasized the need to embrace innovative concepts like cross subsidies to address the challenges posed by inflation and the escalating costs of building materials, which have contributed to the increase in planned house prices.
Dangiwa stated, "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 agencies under the ministry." He further explained that cross subsidies are essential policy tools used by governments and urban planners to tackle housing affordability issues and foster inclusive urban development
. This approach involves redistributing the costs and benefits of housing development across different income groups.
The minister stressed that the driving force behind this initiative is not profit but the desire to ensure that all Nigerians have access to decent and affordable housing. Through cross-subsidy, the ministry aims to create a blueprint for a harmonious society, ensuring that the benefits of growth are shared by all. The dream of affordable housing is being transformed into a tangible reality for the citizens of Nigeria.