as a Mechanism for the Provision of Affordable Housing Delivery in Nigeria

274 Pages·2016·2.44 MB·English

by  Julius Ojebode

Public-Private Partnership (PPP) as a
Mechanism for the Provision of
Affordable Housing Delivery in Nigeria

Akinniyi Julius Ojebode

A thesis submitted in partial fulfilment of the requirements of the University
of Brighton for the degree of Doctor of Philosophy

June 2016

School of Environment and Technology
College of Life, Health and Physical Science
University of Brighton
Abstract
The international community recognises that increasing the provision of affordable housing
is one of the major development challenges of the twenty-first century. This challenge is
even more severe in developing economies with high population such as Nigeria, where
the government has tried a variety of housing initiatives to help address the challenge but
to relatively very little effect. One of the recent initiatives involves the use of Public
Private Partnership (PPP). Unfortunately, the strategy used to date does not accurately
reflect what is needed to stimulate and broaden housing provision (NHP, 2012). This thesis
sought to understand this major policy issue by examining how an effective PPP approach
could assist in increasing affordable housing delivery. The dearth of affordable housing is a
national concern, with the federal government of Nigeria estimating that there is a deficit
of 23 million houses in Nigeria (FGN, 2013).
The aim of this study is to develop a PPP framework for the implementation of affordable
housing delivery in Nigeria. To do this, the research develops a framework based on five
components: capacity development, operating environment, project development, project
financing and government commitment. The research also uses the Institutional Analysis
and Development (IAD) Framework to analyse and initiate housing policy reform for PPP
arrangement. The IAD Framework helps to understand key variables and the process to
evaluate the effectiveness of using PPP as a mechanism for affordable housing delivery in
Nigeria. The research was based upon in-depth literature review and primary data
collection using semi-structured interviews with various practitioners in the public and
private sectors using PPP for housing delivery in Nigeria.
The research provides further evidence on constraints that are hindering the effectiveness
of PPP on affordable housing delivery in Nigeria, including lack of regulation guarantee,
poor financial projections, poor feasibility assessments, poor communication, inadequate
financial resources, project cancellation and contract renegotiation etc. PPP needs to
develop a clear statement of objectives for affordable housing delivery, well-
communicated strategy, a clear institutional framework, independent oversight, sustainable
financing mechanisms and allow flexibility for implementation in order to mitigate these
constraints. In addition to providing the basis for more effective housing policy, the
research develops a PPP model for affordable housing delivery. These findings could assist
in developing effective tools to enhance the process, build appropriate institutions and
legal system for a fairer and more transparent environment to facilitate the private sector
involvement in affordable housing delivery in Nigeria.
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Table of Contents

Title Page…………………………………………… .. ……………………………….........…i
Abstract…………………………………… ... ………………………………………………..ii
Table of Contents………………………………… ... ………………………………………..iii
List of Figures…………………………………… ... ………………………………………...ix
List of Tables……………………………………..... ………………………………………….x
Declaration…………………………………… ... …………………………………………....xi
Acknowledgements…………………………… ... …………………………………………..xii
Abbreviations................................................... ... ..............................................................… xiii
CHAPTER ONE: GENERAL BACKGROUND ……………… .... ………………………….1
1.1Introduction……………………………………………… .... ……………………….......1
1.2 Rationale for Affordable Housing Delivery…………… .... …………………………….2
1.3 Possible Initiatives for Affordable Housing Delivery … .... …………………………….5
1.4 The Case for Public Private Partnership……………… .... …………………………...…7
1.5 Why Emerging Middle Class So Important…………… ... ……………………………11
1.6 Research Questions……………………………… ... ………………………………….14
1.7 Aim of this Research……………………………… .... ……………………………… 14
1.8 Research Objectives……………………………… ... …………………………………14
1.9 Gap of Knowledge …………………..………… .... …………………………..……...15
1.10 Outline Research Methodology……………… .... ……………………………………17
1.11 Structure of the Thesis……………………… .... ……………………………………..18
1.12 Conclusion…………………………………… .... ……………………………………20
CHAPTER TWO: LITERATURE REVIEW: PUBLIC PRIVATE PARTNERSHIP ............ 21
2.1 Introduction………………………………………………………………………… .... 21
2.2 Conceptualising Public Private Partnership ................................................................... 21
2.3 Public Private Partnership (PPP) In Different Arrangements ........................................ 23
2.3.1 PPP as Tool of Financial Arrangements .................................................................. 24
2.3.2 PPP as Tool of Governance or Management ........................................................... 26
2.3.3 PPP as Tool of Development Process ...................................................................... 27
2.4 Public Private Partnership Criticisms ............................................................................. 28
2.5 Nature of Public Private Partnership Arrangement ........................................................ 30
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2.6 Initiators of Public Private Partnership .......................................................................... 31
2.7 Types of Public Private Partnership ............................................................................... 33
2.7.1 Operation, Maintenance and Service Contracts ....................................................... 34
2.7.2 Management Contracts………………………. ....................................................... 34
2.7.3 Leases and Affermage Contracts ............................................................................. 35
2.7.4 Joint Ventures…………….................................................................................. .... 36
2.7.5 Privatization……………....... ................................................................................. .37
2.7.6 Concession……………………………………………………………………... .... 37
2.7.7 Other Various Concession Contracts ....................................................................... 39
2.8 Why PPP Could Be an Effective Tool for Affordable Housing ..................................... 42
2.8.1 Efficiency Gain…………………………………………………………............ .... 43
2.8.2 Sources of Financing………………………………………………………… ....... 44
2.8.3 Better on-time construction performance ................................................................ 44
2.8.4 Earlier delivery…………………………………………………………………. ... 45
2.8.5 Innovation……………………………………………………………………… .... 45
2.8.6 Protection of the Public Interest............................................................................... 46
2.8.7 Clear Accountability…………………………………………………………… .... 46
2.9 The Challenges for Public Private Partnership ............................................................... 47
2.10 Conclusion………………………………………………………………………… .... 49
CHAPTER THREE: LITERATURE REVIEW: AFFORDABLE HOUSING
DEVELOPMENT IN NIGERIA……………………………………………………… ...... 51
3.1 Introduction…………………………………………………………………………. ... 51
3.2 Historical and Geographical Background of Nigeria ..................................................... 51
3.2.1 Nigeria…………………………………………………………………………... .. 51
3.2.2 Geography……………………………………………………………………… .... 51
3.2.3 Population……………………………………………………………………… .... 52
3.2.4 Politics and Socio-economics in Nigeria ................................................................. 53
3.3 Definition and Concept of Affordable Housing ............................................................. 54
3.4 Affordable Housing definition in the Context of this Research…………………… ..... 59
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3.5 Overview of Affordable Housing in Nigeria .................................................................. 61
3.6 Housing Market in Nigeria………………………………………………………… ..... 64
3.7 Review of Past Policies and Programmes ...................................................................... 65
3.8 Affordable Housing Need and Effective Demand.......................................................... 67
3.8.1 Housing Demand……………………………………………………………. ........ 67
3.8.2 Housing supply………………………………………………………………… .... 68
3.9 Current PPP for Provision of Affordable Housing in Nigeria ........................................ 69
3.10 Justification for New PPP Approach for the Provision of Affordable Housing in
Nigeria………………………………………………………………………………… ...... 73
3.11 Challenges to Affordable Housing Delivery in Nigeria ............................................... 75
3.11.1 Financial challenges………………………………………………………… ....... 76
3.11.2 Credit system…………………………………………………………………... .. 77
3.11.3 Ownership and Management of Land .................................................................... 78
3.11.4 Basic Infrastructure…………………………………………………………… .... 79
3.11.5 Building Materials……………………………………………………………. .... 80
3.12 The Significance of Affordable Housing ..................................................................... 81
3.12.1 Affordable Housing as a Driver of Economic Development ................................. 81
3.12.2 Affordable Housing as a Tool of Poverty Alleviation ........................................... 83
3.12.3 Affordable Housing as a Tool for Democracy and Governance ........................... 83
3.12.4 Affordable Housing as a Tool for Optimal Health ................................................ 84
3.13 International PPP Experience on Affordable Housing ................................................. 84
3.13.1 Lesson Learnt From International Experience .......................................................... 90
3.14 Conclusion………………………………………………………………………… .... 91
CHAPTER FOUR: RESEARCH METHODOLOGY ............................................................. 93
4.1 Introduction…………………………………………………………………………. ... 93
4.2 Research Process………………………………………………………………….. ...... 93
4.3 Philosophical Approach ………………………………………………………….... ….94
4.4 Qualitative Research……………………………………………………………….. ..... 96
4.5 Three Cpmpeting Policy Frameworks………………………………………… .... ……99
4.5.1 Co-Management Forms of Institutional Design ……………………………… .... ..99
4.5.2 Policy Framework for Sustainable Real Estate Markets ……………………… .. .100
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4.5.3 Institutional Analysis Development (IAD) Framework ......................................... 101
4.6 Research Method: Semi-structured Interviews ............................................................ 107
4.6.1 Interviews Participant's Profiles………………………………………… .... …….109
4.6.2 Follow-up interviews with respondents ................................................................. 110
4.6.3 Sampling………………………………………………………………………. ... 111
4.6.4 Pilot Study…………………………………… .... ……………………………….113
4.7 Literature review………………………………………………………………….. .... 113
4.8 Data Analysis……………………………………………………………………… ... 114
4.9 Model Development……………………………………………………………… ..... 116
4.10 Research Reliability and Validity ............................................................................... 117
4.10.1 Reliability of Research method............................................................................ 118
4.10.2 Validity of Research method ............................................................................... 119
4.10.3 Testing Validity and Reliability ........................................................................... 120
4.11 Ethical Issues……………………………………………………………………. ..... 122
4.12 Limitations……………………………………………………………………….. .... 123
4.13 Conclusion……………………………………………………………………….. .... 123
CHAPTER FIVE: DATA COLLECTION AND ANALYSIS ............................................. 124
5.1 Introduction………………………………………………………………………. ..... 124
5.2 Application of Nvivo 10 in Data Analysis……………………………………… .... . 125
5.3 Physical Conditions: Current Affordable Housing Provision Problems in Nigeria ..... 126
5.4 Attributes of Community: Analyse PPP Attributes for Affordable housing Delivery
in Nigeria……………………………………………………………………………… .... 130
5.5 Rules-in-Use……………………………………………………………………… ..... 135
5.6 Action Situations: Factors Enhancing the Establishment and implementation of
PPP for Affordable Housing delivery in Nigeria ............................................................... 136
5.7 Participants: Key PPP Actors for the Provision of Affordable Housing Delivery ....... 141
5.7.1 Public Sector………………………………………………………………….. .... 142
5.7.2 Private Sector…………………………………………………………………. .... 147
5.8 Patterns of Interaction……………………………………………………………... ... 148
5.9 Evaluating Criteria: Evaluating PPP Performance for Affordable Housing
Delivery……………………………………………………………………………… ...... 150
5.9.1 Efficiency……………………………………………………………………... .... 152
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5.9.2 Equity…………………………………………………………………………. .... 152
5.9.3 Accountability……………………………………………………………….. ...... 153
5.9.4 Conformance to general morality .......................................................................... 154
5.10 Conclusion……………………………………………………………………….. .... 154
CHAPTER SIX: CONSTRAINTS AND MITIGATING FACTORS ON PPP
AFFORDABLE HOUSING DELIVERY IN NIGERIA ....................................................... 157
6.1 Introduction………………………………………………………………………. ..... 157
6.2 PPP Constraints and Mitigating Factors on Affordable Housing Delivery in Nigeria 157
6.2.1 Lack Regulatory Guarantee………………………………………………….. ..... 159
6.2.2 Inadequate Financial Resources............................................................................. 160
6.2.3 Inadequate Knowledge and Skills.......................................................................... 162
6.2.4 Poor Financial Analysis and Projections …………………………………… ...... 163
6.2.5 Lack of Leadership…………………………………………………………… .... 164
6.2.6 Contract Renegotiation and Cancellation .............................................................. 165
6.2.7 Inadequate Monitoring and Due Process ............................................................... 167
6.2.8 Inappropriate Sharing of Risks .............................................................................. 169
6.2.9 Lack of Transparency ………………………………………………………… .... 170
6.2.10 Poor Communication……………………………………………………….. ..... 172
6.2.11 Corruption………………………………………………………………….. ...... 174
6.2.12 Non- competitive bidding…………………………………………………… .... 175
6.2.13 Other Constraints are: Greed, Arrogance, Suspicion and cultural Differences ... 176
6.3 Summary and Conclusion ………………………………………………………… .... 177
CHAPTER SEVEN: PPP FRAMEWORK FOR AFFORDABLE HOUSING DELIVERY 180
7.1 Introduction……………………………………………………………………….. .... 180
7.2 Development of a Schematic Model for Using PPP to Deliver Affordable
Housing in Nigeria……………………………………………………………………. .... 180
7.3 The PPP Model Mechanisms for Affordable Housing Delivery .................................. 182
7.4 Evaluation of PPP Model for Affordable Housing Delivery ....................................... 193
7.5 Public Private Partnership Affordable Housing Delivery Framework ......................... 196
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7.5.1 The Need for PPP Framework for Affordable Housing Delivery…………… ...... 197
7.6 Conclusions………………………………………………………………………. ..... 205
CHAPTER EIGHT: CONCLUSION AND RECOMMENDATIONS ................................ 209
8.1 Introduction……………………………………………………………………….. .... 209
8.2 Work Accomplished……………………………………… .... ……………………….209
8.3 Conclusion………………………… ……………...………………………………….215
8.4 Contribution to Knowledge and Originality……………………………… ………….216
8.5 Recommendations……………………………………………………………….. ...... 217
8.6 Recommendations for Further Research ..................................................................... 219
REFERENCES………………………………………………………………………….. ..... 221
APPENDIX A – Research Instruments…………………………………………………...... 246
APPENDIX B - Nigeria's PPP Institutional Framework ...................................................... 251
APPENDIX C – Thematic Analysis…………………………………………………… ...... 252

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List of Figures

Figure 1: Nigeria's Middle Class (in millions) ......................................................................... 12
Figure 2: Types of PPP Contracts………………………………………………………… .... 33
Figure 3 Population of Nigeria from 1911-2013 (Million) ...................................................... 52
Figure 4: Relative Poverty Headcount from 1980-2010 .......................................................... 58
Figure 5: Nigeria Homeownership Rate Compared with some Countries ............................... 63
Figure 6: Showing Impact of Affordable Housing Delivery to an Economy .......................... 82
Figure 7: A Framework for Institutional Analysis Development .......................................... 124
Figure 8: Showing Interviewees Response to Affordable Housing Problems in Nigeria ...... 126
Figure 9: Showing Interviewees Responses on Requisite Attributes of PPP for Affordable
Housing Delivery……………………………………………………………………… ....... 131
Figure 10: Interviewees Responses to Factors that could Enhance PPP in Nigeria............... 137
Figure 11: Respondents Views on PPP Constraints to Affordable Housing Delivery in
Nigeria……………………………………………………………… .... ……………………158
Figure 12: Typical Structure of a PPP Project ...................................................................... 181
Figure 13: Showing PPP Model for Affordable Housing Delivery ....................................... 183
Figure 14: PPP Transactional Structure for Affordable Housing Delivery……………… ... 185
Figure 15: Financial Method for PPP Affordable Housing Delivery .................................... 188
Figure 16: PPP Affordable Housing Delivery Framework………………………… .... ……198

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List of Tables

Table 1: Population of Nigeria from 1911 - 2013 (Million) .................................................... 52
Table 2: Nigeria at a Glance……………………………………………………………......... 53
Table 3: Relative Poverty Headcount from 1980-2010 ........................................................... 58
Table 4: Assessment of Impact of National Housing Programmes from 1975 - 1995 ............ 69
Table 5: Interviews Participant's Profiles……………… ....... ………………………………109
Table 6: Relationship between Rules-In-Use and Affordable Housing Partnership.............. 135

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