Grant Properties’ Goshen Beach Estates project was developed in spite of loans taken out at nearly 40%. Awosedo says that banks need to think longer term.

Olajide Awosedo should not be smiling. He’s just given us a whirlwind tour of the real estate development spectrum in Lagos these days and there is, frankly, little to smile about. CEO and President of Grant Properties, one of the largest development outfits in Nigeria, Awosedo should be fuming over the status quo, maybe even slamming his fist against the desk to vent his frustration. Reluctant bankers, venal officials and poor management have consistently held up one real estate project after another, costing him millions of dollars in lost profit.

Yet he evinces nothing but deep-seated aplomb, answering questions in a steady tone, claiming that the entire issue can be reduced to a lack of ‘will’ on behalf of heads of banks and governments. He speaks as though the obstacles he has faced over the past few years in getting Goshen Beach Estates, Victoria Park Estates and Beautiful Gate Estates, a few of his company’s medium and high-income development projects, off the ground have become so commonplace that he now finds them frustratingly comical.

Finance is the most challenging area for developers in Nigeria, Awosedo claims. “There are so many things missing,” he says. “Developers do not have access to the funds required to develop houses. Our access is the same as that of any importer – it’s all short-term financing.”

Developers and entrepreneurs alike have struggled for access to long-term funding from Nigerian banks. Financial institutions across the country have severely limited how much credit they extend to real estate developers – even when demand for housing is far greater than supply – for fear of a distant slowdown, an inauspicious sign of the state of the economy.

Olajide Awosedo CEO and President of Grant Properties

Nigerians like Awosedo are left borrowing money at exorbitant rates. In 2001 Grant Properties launched its Goshen Beach Estates project – 86 dwellings, the majority of which were four-bedroom detached houses – using Nigerian funding. “We borrowed money at 39 percent and 35 percent for 18 months,” Awosedo said. “My friends said that I was crazy at the time, but what choice did I have? Today, the rates have come down, but they are still in the double digits.”

The Nigerian economy has improved in recent years thanks to reforms and debt relief. In November 2005 Nigerian officials brokered a deal with the Paris Club to eliminate $18 billion of debt; nevertheless, Africa’s most populous country continues to outspend itself, even with increased income from record oil prices. Furthermore, persistent corruption and banking scandals in recent years have darkened an already ominous shadow lingering over the economy.

A seasoned banker himself, Awosedo says Nigerian banks need to start freeing up capital for those with serious business plans to pump life into the economy. “I think the entire banking system needs to examine its commitment to long-term economic development; after all, they would only be required to devote a fraction of their entire loan portfolio toward such long-term lending.”

Record-high oil prices across the world have given Nigerian officials, through the country’s chief export – crude oil – an important opportunity to secure its future and reach its 2020 goals. Awosedo says officials must take advantage of the new reserves of petrodollars and convert them into funding for entrepreneurs and long-neglected infrastructure projects like highways, and sea and rail transport.

“If by 2020 we don’t have a rail system connecting the north and south, then there’s no vision,” states the CEO. “We need to ask ourselves: what are we doing right now to ensure that in the year 2020 whoever wants to go to a government school can do so for free and whoever is ill can get good medical care? Any system that doesn’t do that is useless.”

While a long list of things need to happen to improve Nigerians’ physical and economic well-being – the average Nigerian lives for 48 years and earns $2,000 per year – it is important that the government supports the initiatives of businessmen like Awosedo, whose projects address series issues such as lack of housing.

The current housing shortage in Nigeria is no secret, nor has it been for many years. “In the WHO report of 2000 (an independent assessment of Nigeria), they set the shelter target for Lagos alone at 470,000 units per annum. Several years later, the government and private sector working together have built less than 2,500,” the CEO reported.

Bottlenecks in local bureaucracy and empty promises are just as much to blame for the present economic stagnation as the disinclined banking system, according to Awosedo. “I bought 100 hectares (247 acres) of land in 2003 to build 4,000 housing units, 500 of which were to be for employees of the American embassy and the rest were to be for the general public. When we started planning in 2004, the Governor at that time assured the Counsel-General of the American Embassy that within 15 days the relevant title would be issued. Well, four years have since passed and we still don’t have the title.”

Despite the endless obstacles and hardships, Awosedo has sold hundreds of houses and more importantly refuses to give up, refuses to stop smiling. He thinks the current president’s vision will help alleviate some of his and many other Nigerians’ woes. “I think that the Yar’ Adua administration has done very well,” he said. “Personally, I would love to work with him. I admire his courage. He is the man that a developing nation like Nigeria needs.”