CO-OPERATION HOUSING SOCIETY A MODEL FOR EFFECTIVE HOUSING DELIVERY IN NIGERIA

CO-OPERATION HOUSING SOCIETY A MODEL FOR EFFECTIVE HOUSINGDELIVERY IN NIGERIA

BYUWABOR JOSHUA

Department of Estate Management, University of Lagos, LagosState, Nigeria.

E-mail: [email protected], Phone No: 07060811005

ABSTRACT

It is now a well-recognised fact that Governments in most, if not all developingcountries of the world and Nigeria in particular have not been, nor will they likely beable to adequately provide direct housing to all that are in need of shelter. Cooperativehousing is an alternative housing model that provides a foundation for communitybuilding and shared responsibility through innovative housing design and inclusiveresident governance structures. This study seeks to explore the potential of cooperativehousing as a model that will help to address the housing challenges in Nigeria. Inparticular, the paper examines the, the nature of housing delivery in Nigeria, co-operative values, principle, operationalization, types and benefits of the system; andgoes further to apply this model (co-operative housing) in Nigeria in the face of presentsocio-economic realities. A well organized and supported co-operative society will go along in boosting the nature of housing delivery in Nigeria.

Keyword: Cooperative housing, values, principle,

operationalization, Government

INTRODUCTION

Housing is essential for human existence and its procurement

requires huge capital, its provision is based on the availability

of finance. Housing goes beyond the mere assemblage of bricks and

mortar. It encompasses the totality of the environment and

infrastructure which provides human comfort, enhance people’s

health and productivity as well as enable them to sustain their

psycho-social or psycho-pathological balance (Ayeniyo 2011). The

housing delivery system in Nigeria is a combination of

interrelated processed. As such, housing problems are

multifarious and requires multidimensional solutions. Nigerians

diverse housing problems revolve around over-crowding and slum

housing (Danmola 2007).

However, for many Nigerians, the desirability of owning or living

in decent homes is as strong as the reality of its elusiveness.

Inability to afford this prime asset is largely a root cause of

the deficient housing situation in Nigeria. Government overtime

has intervened in the housing sector by increasing housing stock

through the construction of housing estates and through its

mortgage institutions, facilitated the disbursement of housing

loans. It is now a well-recognised fact that Governments in most,

if not all developing countries of the world and Nigeria in

particular have not been, nor will they likely be able to

adequately provide direct housing to all that are in need of

shelter. Whereas decent housing has been universally accepted as

one of the basic needs of individuals, the family and the

environment (Adeboyejo, 2005). It should be noted that, housing

is a reflection of the cultural, social, aesthetic and economic

values of a society as it is the best physical and historical

evidence of civilisation in a country.

Essentially, housing delivery involves series of processes by

which housing resources such as land, labour, finance and

building materials are combined to produce new housing units. It

could also involve the upgrading of existing units as well as

distribution of both new and existing housing to consumers

(Agbola and Alabi 2000). The supply, while fixed in the short-

run, involves lots of constraints, including access to land,

funding, technology and perhaps executive capacity. It is

therefore rewarding both at the micro and macro levels that the

objectives of a project are eventually fairly achieved after

putting in a lot of resources. Cooperative housing is an

alternative housing model that provides a foundation for

community building and shared responsibility through innovative

housing design and inclusive resident governance structures

(Ganapati, 2010). Cooperative housing is an increasingly popular

housing model across the developed world particularly for social

housing (Robertson and Theisen, 2011).

With the high rate of urbanisation which is largely as a result

of the rural-urban migration into the cities, it is assumed that

the higher the population and rate of urbanisation in a city, the

higher the level of housing needs of its inhabitants. There is no

doubt that housing shortage and its concomitant problems in these

urban centres are due to the influx of people into the cities.

This study seeks to explore the potential of cooperative housing

as a model that will help to address the housing challenges in

Nigeria. In particular, the paper examines the nature of housing

delivery in Nigeria, co-operative values, principle,

operationalization, types and benefits of the system; and goes

further to apply this model (co-operative housing) in Nigeria in

the face of present socio-economic realities.

The remainder of the paper is structured into four (5) main

sections. Section one reviews the operational framework. Section

two dwells on the structure of the co-operative housing. Section

3 reviews the assessment of co-operative housing in United States

and Australia, while section 4 discusses the relevancy of co-

operative housing in Nigeria. Section 5, the last section,

concludes given some recommendations. It is hoped that doing

this, all of us, collectively as a nation act right with a view

to enhancing the quality of our shelter.

Nature of Housing Delivery In Nigeria

In many developing countries, including Nigeria, urban housing

crisis is escalating unabated despite a number of new policies,

programs and strategies being engaged in by public and private

sectors in addressing this problem. Government has recognized

that the majority of those in need of housing in many less-

developed nations in Africa, Asia and South America are in the

low income categories and that some require special housing

programs to be able to live in decent housing(Offia et,el).

Several studies have indicated that public housing provision

involves policy formulation, institutional development, actual

housing provision, allocation and management (Omole, 2001;

Valenca, 2007; Sengupta and Tipple, 2007). This goes to suggest

that challenges in public housing provision are related to policy

formulation, institutional growth and development as well as

actual production and consumption of housing units and services.

In fact, Sengupta and Tipple (2007) noted that the performance of

public-sector housing in terms of total supply and quality, price

and affordability of housing and services depends on these key

areas and perhaps on other intervening factors.

Specifically, the actual production of housing units and

associated services is one of the key objectives of public

housing provision which aims at increasing decent and affordable

housing stock within a country, state or locality. However,

evidence from literature review clearly shows that public housing

provision in many developing countries, including Nigeria, has

not recorded any impressive result in matching housing production

to housing demand, as there are huge housing supply deficits in

many less developed countries (Rondinelli, 1990; Mukhija, 2004;

Sengupta and Ganesan, 2004; Olotuah, 2010).

The burgeoning housing supply deficit in Nigerian which as at

2008 was put at over 15 million housing units (Onwuemenyi, 2008)

for instance, has been blamed on low productivity in public-

sector housing. Taking a closer look at planned and constructed

number of housing units in the different public housing programs

initiated between 1962 and 1999 record shows that a total of

618,498 housing units were planned for production in the various

public housing schemes across the country and around 85,812

housing units representing around 14% of the planned housing

units were actually completed. This achievement level clearly

shows that many of the public housing programs initiated by

government within that period failed to meet the targeted number

of housing units.

With respect to affordable housing provision, the UN-HABITAT

(2006) report on Nigeria noted that past public housing policies

and programs in the country were aimed at enabling low-income

earners gain access to decent housing at affordable cost.

According to Aribigbola (2008), the 2002 New National Housing and

Urban Development Policy (NNHUDP) for instance, asserted that no

Nigerian is expected to pay more than 20% of his or her monthly

income on housing. But to the contrary, prior studies (Onibokun,

1985; Awotona, 1990; Mba 1992; Olotuah and Bobadoye, 2009; Ibem,

2010) have shown that the targeted population of many past public

housing schemes in Nigeria did not benefit from such schemes.

This was due to high cost of housing units provided.

Consequently, several authors have contended that the constraints

in accessing housing inputs (land, building materials and

finance) as well as cost of providing infrastructure were partly

responsible for the hike in the cost of public housing beyond the

reach of an average Nigerian (Ikejiofor, 1999; UN-HABITAT, 2006;

Aribigbola, 2008).

Co-operative Housing

Co-operatives are people-centred and are owned, controlled, used

and invested in by their members, who have a responsibility to

support their co-operative by being an active member. In return,

the co-operative must ethically service the needs of its members

(Cooper et,el.).

Members are the heart and soul of a co-operative. The main

purpose of a co-operative is for all members to join with a group

of like-minded people to share in the benefits of co-operation,

which are designed to meet the social, economic and cultural

needs of its members. Co-operatives promote member development

through their participation in governing the organisation, and

usually provide local social or economic development, such as

providing employment, goods or services that would not otherwise

be available or affordable to the members.

Whether the term is used as co-operative housing or housing co-

operative the literature on the subject matter is extant with

conceptual clarifications (Wikipedia 2013, Sazama, 2000; Fasakin,

1998; NCHAA, 2001; Kennedy, 1996). The different definitions

however reflect varying typologies rather than kinds of co-

operatives. For instance, Wikipedia defined Housing co-operative

as “a legal entity, usually a corporation, renting own real

estate, consisting of one or more residential buildings, and

that, it is one type of housing tenure”.

According to Sazama (2000) housing cooperative is one in which

member-residents jointly own their building, democratically

control it and receive the social and economic benefits accruable

from living in and owning a cooperative. Housing co-operatives

are often established to meet the needs and visions of certain

groups of people, such as people from low income households, of

specific ethnic or religious background, artistic persuasion,

age, sex, sexual preference, disabilities, or environmental

awareness. The general objective function of the housing co-

operatives is to provide for the low and medium income class,

decent and affordable housing. In terms of structure and

function, they are mostly set up by civic organisations or

private realtors with partial funding from governments which in

most cases act as policy maker or facilitator (Adeboyejo &

Oderinde, 2013).

In Nigeria, co-operative housing is not new, as the principle is

embedded in the customs of many Nigerian ethnic nationalities.

Among the Yorubas of South-western Nigeria, for instance,

informal co-operative means, known as aaro in local language,

have been used to achieve aspects of home ownership. This

involved pooling physical efforts of relatives and friends, and

obtaining loans, aajo or esusu from saving societies. However,

there are very few, if any formal, or real housing cooperative

movements in the country (Adeboyejo & Oderinde, 2013).

Co-operative Values and Principles

Cooperatives are based on the values of self-help, self-

responsibility, democracy, equality, equity and solidarity. In

the tradition of their founders, cooperative members believe in

the ethical values of honesty, openness, social responsibility

and caring for others.

According to UN-Habitant (2010) the cooperative principles are

guidelines by which cooperatives put their values into practice.

Co-operative functions in the following way:

As voluntary organizations, open to all persons able to use their

services and willing to accept the responsibilities of

membership, with no discrimination against others.

Cooperative societies are democratic organizations controlled by

their members, who actively participate in setting their policies

and making decisions. Members contribute equitably to, and

democratically control the capital of their cooperative and

allocate surpluses for developing the cooperative, benefiting

members in proportion to their participation and contribution

Cooperatives are autonomous, self-help organizations controlled by

their membership. They enter into agreements or raise capital on terms

that ensure democratic control of their members. They also provide

education and training for their members, elected representatives,

managers and employees so they can contribute effectively to the

development of their cooperatives, and inform the general public on

the nature and benefits of cooperatives

Cooperatives serve their members most effectively and strengthen the

cooperative movement by working together through local and

international structures; they always focus on member needs,

cooperatives work for the sustainable development of their

communities through policies accepted by their members.

Operational Frame Work

The basic operational structure of the Housing Co-operative takes

the following format; the co-operative corporation owns or leases

housing project, including all land, dwelling units and common

areas, its tenant stockholders, who by virtue of their stock

ownership are entitled to occupy a specific housing unit, in

turn, jointly own the co-operative corporation (Danmola 2007).

The tenant-stockholder purchases stock (sometimes called shares

or membership certificates) in the co-operative corporation. Upon

purchase of the stock, he or she signs a perpetual lease, called

a proprietary lease or occupancy agreement that gives him or her

legal and exclusive right to occupy a dwelling unit as long as

all obligations to the co-operative are met. The corporation is

the legal owner of the property. As such, the corporation is

responsible for meeting its financial obligations, including

mortgage payments, real property taxes and management and

maintenance costs.

Cooperatives societies are autonomous, self-help organizations

controlled by their members, thus if they enter into agreements

with other organizations, including governments, they should do

so only on terms that would ensure democratic control by their

members and maintain their autonomy. In this sense, cooperatives

need autonomy and decision-making ability to exist at all.

Cooperative societies also differ from shareholder owned

companies in that the members have one vote per person regardless

of the amount saved, deposited, borrowed, bought or work done.

The reason for this as we noted beforehand is to ensure

democratic participation in the policymaking and control of the

cooperative by its members (UN-Habitant 2010). The keystone to

any cooperative is democratic control by members to achieve an

agreed common objective. For housing cooperatives, this means

creating a home for individual members and the community as a

whole.

Types of Housing Cooperatives

The purpose of a housing cooperative as we have noted before is

to provide housing for members who can add their own equity to

funds raised through governments or financial markets or other

sources.

Short Life Co-operatives

This kind of co-operative that is designed to accommodate the

homeless for short periods. They are usually collapsible

structures or mobile homes situated on vacant plots owned by

institutions;

Community Housing Co-operatives

This form of cooperative is formed by an umbrella association of

individual cooperatives located within a neighbourhood. They

usually come together to support one another and have the ability

to purchase or lease new buildings based on experience and

membership

Mutual Housing Association

These types of cooperative societies are non-profit corporation

set up to develop, own and operate housing. Generally, the

corporation is owned and controlled by the residents of the

housing project;

Subsidised Co-operative

This form of co-operative receives some form of subsidy from a

government or non-profit entity to lower the cost of the housing

to the tenant stockholders;

Building Co-operatives

In this type of cooperative, housing is co-operative built, but

the cooperative dissolves after construction is completed and

housing is turned over to individual private ownership;

Communal Housing Co-operatives

In this type of cooperative residents share food and activities.

Decision-making is often a consensus by all residents. Other

types of communes are greenhouse co-operatives;

Advantages of Housing Cooperatives

Housing co-operatives basically differ from other market actors

by creating value for their members. With this in view UN-

Habitant (2010) highlighted some advantages and there are noted

below:

Economic Advantages

Co-operative society creates an opportunity for affordability of

houses. Lower down payment, much lower closing costs, economies

of scale, and a longer mortgage term all make co-operatives more

affordable than other ownership housing. Members have no reason

to increase monthly charges substantially unless taxes or

operating costs go up, so monthly charges remain reasonable.

The cooperative member is usually considered a homeowner and, as

such, can deduct his or her share of the real estate taxes and

mortgage interest paid by the cooperative. Cooperatives can

provide for accumulation of individual member equity. For market-

rate cooperative societies, the accumulation of equity and resale

prices are based on the market. Limited-equity coops establish

limitations on the accumulation of equity to assure long-term

affordability to new members.

Members have no personal liability on the cooperative mortgage.

The cooperative association is responsible for paying off any

mortgage loans. This can often make it possible for persons whose

income might not qualify them for an individual mortgage to buy a

membership in a limited equity coop.

With the involvement in cooperative association, members can

jointly exert influence in order to change tax rates and utility

prices and obtain improved services from local governments. The

cooperative, as consumer advocate, can also join with other

organizations.

Cooperative society encourages saving among members. Members can

benefit from economy of scale in cooperative operating costs as

well as from not-for-profit operation. Also, when there are

transfers, only the out-going member’s equity must be financed by

the incoming member. Transfers of shares are subject to fewer

settlement costs.

B. Social Advantages

Cooperatives housing offer control of one’s living environment

and a security of tenure not available in rental housing. As

mutual owners, member residents participate at various levels in

the decision-making process. This is not true of tenants who

usually do not have the opportunity to exercise responsibility.

Members own the cooperative together and have the security of

being able to remain in their homes for as long as they wish, as

long as they meet their monthly obligations, and abide by the

cooperative bylaws, rules, and regulations.

Many cooperative members indicate that the possibility for

interaction with people from different backgrounds, cultures, and

income levels is a positive factor in their decision to become a

member.

By establishing cooperative procedures and working together,

people are able to provide services for themselves that otherwise

would be impossible to obtain. When one cooperatively organized

venture is successful it often becomes clear that people can be

successful in another area as well. As a result, the original

effort often can be strengthened.

C. Physical Benefits

Shared maintenance responsibilities: cooperative members

usually have limited direct maintenance responsibilities. The

cooperative association is responsible for major repairs,

insurance, replacement of worn-out buildings, and upkeep of

common grounds and facilities.

Vandalism and Security: cooperative members vigorously protect

their association’s property. An important benefit of converting

rental properties to cooperative ownership is reduction in

vandalism and abuse of property and improved and shared security

arrangements. Recent studies show that the cooperative’s presence

in the neighbourhood brings neighbourhood crime down.

Standard cooperative practices: it is evident that cooperative

housing associations are most successful when operated in

accordance with specific recommended practices, in addition to

the general co-op principles. The cooperative’s board of

directors should keep its members informed of all its actions. A

regular communication system for instance, through frequent

newsletter, information bulletins, special meetings, solicitation

of members for opinions and priorities-strengthens the

relationship between the board of directors and the members.

The cooperative society must maintain adequate financial reserves

to protect the cooperative and its members’ interests. These

usually include a general operating reserve and a reserve for

replacing components of buildings as they deteriorate. Such

reserves reduce the possibility of members having to pay

unexpected special charges in emergencies. An annual audit should

be conducted by professional accountants and made available to

all members.

To protect the interests of the remaining residents, the

cooperative board must have the right to approve incoming members

who take the place of those leaving the cooperative. A credit

check and a visit with the membership committee are usually

required. This process also helps orient the incoming member to

their rights and responsibilities as coop members.

Others

For personal home ownership some benefit can be derivable, as

Danmola (2007) pointed out some of these benefit:

Economically, co-operative housing allows tenant-stockholders

to acquire equity; hence the value of the property appreciates

with time. Even though it is more affordable than individually

developed housing, members have no personal liability in the

co-operatives mortgage, hence persons ineligible for personal

mortgage can buy into a limited equity co-operative.

Furthermore, the members are eligible for tax reductions as

the corporation is responsible for real estate taxes and

mortgages. Buying into a co-operative ensures predictable

monthly costs.

Social advantages of the co-operative housing scheme include

democratic control and participatory decision-making, cultural

diversity, and the elimination of outside landlords. Co-

operatives also foster a sense of kinship, as they are

communities within communities. The physical layout of the

housing complex (usually neighbourhood design) encourages

social interaction.

Physical benefits include shared maintenance responsibilities

as the co-operative association bears the cost of major

repairs. Also vandalism and abuse of property is reduced as

ownership denotes responsibility.

Challenges of the Co-Operative Housing Society

Only few people have realized the potentials of self-help and

housing cooperatives in housing delivery. People have not be

adequately sensitized and mobilized to form cooperatives to meet

their housing needs.

One of the major challenges of major challenge is land

acquisition for housing project development. The problem of land

ranges from delay in title certificate of occupancy acquisition

and plan approval, land speculation leading to high cost and

litigation in case of multiple sale of the same land to different

people to general inadequate access.

Members are not adequately knowledgeable in housing management

and administration particularly on technical aspect of building

and financial management, e.g. bookkeeping. This often led to

poor project supervision, control and financial irregularity.

Another challenge is the presence of government support,

recognition and inadequate operating environment. Financial

constraints and inability of the societies to secure loan or

mobilize enough finances from members have also been a constraint

to the informal housing delivery system.

The heart of any cooperative society is its membership strength

and as such lack of members has possessed a major challenge of

cooperative society. When there are no too much members it will

go long way in affecting the operation of the society because the

more the members the more the contribution.

Majorly because collateral is not required when giving out loans

to members, the society can easily go into bankruptcy. When the

society goes bankruptcy, the members will lose their initial

contribution because there is no financial security.

Application of Co-operative Housing Principle in Nigeria

The co-operative approach to housing provision provides a

framework for aggregating demand, as well as a systematic

approach to housing finance, land acquisition and incremental

building development, particularly among low and middle income

earners.

A co-operative society is a major means to achieving the goal of

house ownership and for sustainable housing provision in the

country. Through the co-operative societies, many people have

been assisted to become home–owners, and this has gone a long way

in solving the problem of housing especially among urban

dwellers.

When properly supported to mobilise funds at affordable rates,

co-operative societies can support the yearnings of the

government on ‘housing-for-all’ as they contribute significantly

to solving the problem of housing shortage among the low income

earners and also improve the quality of life of many Nigerian

citizens.

Socio-economic constraints have affected the Nigerian housing

industry adversely. The construction industry in Nigeria is in

dire straits. The problem is further aggravated by the high cost

of building materials. Inadequate provision of infrastructure

within the existing housing estates is traceable to the ailing

economy, which seems to defy solution. In fact, poverty has been

institutionalized; hence it is difficult for a medium-income

earner to own a house.

Judging from the extensive housing demand in Nigerian urban

centres, there is need for a revolutionary strategy involving

non-market and non-profit making measures. Co-operative housing

provides this alternative, indeed the application of the co-

operative housing principle to Nigeria's housing problem.

The government housing co-operatives and commercial institutions

should encourage cooperative societies by fund the system and

allowing the society enjoy the right to formulate their own

policies and funding arrangements

Furthermore, the government must be involved in the process of

devising a co-operative housing system in Nigeria by providing

financial and technical support to the co-operatives. This can be

achieved by: Promulgating appropriate legislation to give muscle

to the co-operative housing system; Providing for and funding

research in co-operative housing and Providing financial

concessions, by way of tax rebates, autonomy and grants to co-

operatives targeted at the low-income earners.

Conclusion and Recommendations

Apart from the fact that the principle of co-operative is

inherent in most Nigerian cultures, co-operative housing is a

pragmatic and cost-effective means of home- ownership. The

principle has been endorsed by many influential international

organizations such as the United Nations, the International Co-

operative Alliance and the United Nations Centre for Human

Settlements. Furthermore, co-operative housing has been tested in

many nations where it has been used, to varying degrees of

success, to address housing problems.

More investment opportunities need to be incorporated into the

functions of the cooperative societies so as to increase their

revenue base.

Individual ownership of land and houses is a cultural goal and an

expression of sense of achievement. It is a physical

manifestation of the level of success of not only an individual

in society, but also that of his/her ethnic nationality in their

various sociocultural and geo-political units. Any policy or

programme to assist the poor in the area of house ownership must

be geared towards the individual.

Consequently, for the model to succeed, any co-operative housing

programme in Nigeria must ensure the conferment of ownership

rights and privileges to members, who would prefer to be proud

owners or landlords of their lands and houses, no matter how

small the size of plot or indecent and dehumanizing the structure

is. The above reasons explains why in most cases, co-operative

societies in Nigeria generally assisted individual co-operative

members through loans to own the land and to build their own

houses according to the individual’s architectural taste (as

landlord, general term used for house owners).

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