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Experts in the built environment have called on the government to use crowdfunding to bridge the housing deficit in the country.
The Brand and Marketing Associate, Mixta Africa, Kehinde Haastrup, in a statement said by leveraging the power in numbers, small contributions from a large group of individuals could accumulate into a substantial fund for housing projects, which would allow for a broader base of financial contributors, reducing the burden on individual homebuyers and developers.
He said, “We are seeing more microfinance and community-based institutions target low-income individuals and communities in recent years. They are primarily involved in providing microloans to lower-income households. These microloans enable individuals to invest in housing improvements or small-scale housing construction projects, thereby, improving their living conditions incrementally.
“Community-based models focus on collective efforts within communities to pool resources, such as community savings groups or housing cooperatives, to fund housing projects collectively. These models empower communities to take ownership of their housing solutions and leverage their collective assets to address housing affordability challenges.”
In a similar vein, the President of the Nigerian Proptech Association, Dr Roland Igbinoba, said crowdfunding will not raise an N100tn overnight and it is not certainly the only channel for closing this funding gap. But it is sure a new and innovative route outside of the traditional banking system.
He said, “Crowdfunding initiative opens an alternative window to funding real estate and other allied projects and allows developers to have more access to cash at a lower cost and a higher speed. The target of the initiative on the business-to-business side is small and medium-scale developers whose primary objective is to build affordable housing for the average Nigerian but who are too cash-strapped to fulfil this objective.
“The benefits of crowdfunding are enormous. Apart from democratising real estate investment, it also puts the power back in the hands of the people as to what the focus of developers should be: luxury property that allows the housing deficit in the country to keep soaring or affordable housing, which gives an average working Nigerian the opportunity to have decent housing at a more affordable rate, thereby reducing the housing deficit.”
Meanwhile, Haastrup explained that crowdfunding was a broader concept that entailed gathering small contributions from a large and often diverse group of individuals through online platforms to address a wide range of purposes, such as creative projects, business startups, or personal causes.
He added, “Community-based funding is more localised, focusing on a specific community or group with shared interests involving pooling resources within the community to fund initiatives like housing cooperatives, neighbourhood improvements, or projects addressing local needs. Essentially, while crowdfunding is a general term for diverse fundraising, community-based funding concentrates on harnessing support from a defined community for localised initiatives.
“One notable model that is gaining traction is the rent-to-own payment scheme, DUO by Mixta Africa. This approach allows prospective homeowners to move into their new homes while making annual payments (equivalent to annual rent) and gradually build equity.”
According to Haastrup, DUO is designed to provide an accessible path to homeownership for individuals who may struggle with the upfront costs associated with purchasing a house.
“Under this scheme, individuals can lease a property with an option to buy later, during which their annual payments contribute to the property’s purchase price,” he explained.
