Recent statistics have shown that the Nigerian real estate sector has been suffering setbacks. Out of the ₦15 trillion worth of credit facilities (bank loans) that were given to the private sector in Q4 2018, real estate only got ₦622 billion. This represents just 4% of the total loans/credit.
A quick analysis of the 2018 selected banking sector indicators’ report, as released by the National Bureau of Statistics (NBS), revealed that the total bank credit for the real estate sector declined by 12% between Q3 and Q4 2018. During the third quarter, the real estate sector got ₦710 billion, while the corresponding value in Q4 declined to ₦622 billion.
Bank credit falls for the 4th consecutive quarter
Although the sector received ₦622 billion worth of loans in Q4, the amount represented the third consecutive quarter decline in the amount of bank loans allocated to the sector. In 2018, for instance, credit allocated to real estate decreased from ₦784.2 billion in first quarter, to ₦622.7 billion in the last quarter.
5-year low of bank credit to real estate sector
The latest dip in the bank’s credit/loans to the sector is not a new trend. In Q1 2015, credit allocated to the private sector was ₦615 billion, which fell to ₦548.2 billion in Q2 of the same year. By Q4 2015, bank credit to real estate stood at ₦692.2 billion.
Comparing the value of loan in Q4 2015 with that of Q4 2018 shows a 10% decline. In other words, it reveals an all-time low since 2015. This suggests that the cyclical growth movements in the real estate sector can be traced to the decline in banks’ credit available to investors.
Agricultural sector receives much more credit facilities than real estate
The agricultural sector has benefited the most from credit facilities given to private investors. For instance, during the last quarter of 2018, the agricultural sector received the highest bank’s credit of ₦3.5 trillion.
Similarly, the Oil and Gas and Manufacturing sectors are ranked second and third respectively, as their total credits stood at ₦2.2 trillion and ₦1.4 trillion for the period under review. However, the Education and Mining sectors got the lowest credit allocations.
Nigeria’s Real Estate Sector is growing nonetheless
Without a doubt, the real estate sector has continued to be an important sector in the Nigerian economy. Figures have shown that the sector contributed immensely to Nigeria’s gross domestic product (GDP). For instance, in 2018, it contributed ₦1.26 trillion to the country’s national income.
However, the percentage contribution of real estate to GDP declined to 6.41% in 2018 from 6.85% in 2017. Notwithstanding, the real estate sector is engulfed with big potentials.
What analysts say
In developed climes, the mortgage sub-sector plays an important role in stimulating the real estate sector. But while there have been several mortgage schemes and initiatives in Nigeria, the impact has remained somewhat unfelt.
In the meantime, investment analysts have expressed different views on the outlook of the real estate sector. Executive Director and Co-founder of Pertinence Limited, an investment firm, Mr. Sunday Olorunsheyi, said earlier in January:
“It will be difficult to project the fortunes of the Real estate sector, owing to factors such as lack of clear and consistent policies from regulators and a high degree of uncertainty, especially due to the general elections.”
On the other hand, the Chief Executive Officer of Lifepage Group, an investment holding firm, Oladipupo Clement, scored the industry high.
“More landed properties were sold and bought in 2018 than apartments and houses, due to high capital requirement and cost of fund.
Despite uncertainties, such as a decline in oil prices, political instability, inflation and the rising cost of funding, the real estate sector will still thrive.”
Windfall for investors and the growth potentials
If you ask me, I would say the Nigerian real estate sector is what you may want to invest in. Investors in the real estate sector are likely to smile to the banks soon, as they get returns on their investments.
Generally, Nigeria’s real estate sector was sluggish in 2018 because of the lull in the nation’s economy. Real estate experts will likely experience better performance this year because of improvements in the economy, and the anticipated political and economic stability in the country after the just concluded general elections.
There was excess liquidity in the economy during the election period. Recall that the President recently expressed concerns over the huge amount of foreign currency flooding the country, intended to influence the general elections.
As the general elections wound up, the movements of both foreign and domestic currencies for electioneering processes will likely spread and drive patronage in the residential and commercial angles of the real estate sector. Eventually, what this does sometimes is to pressure the price of estate properties to increase, which implies higher revenue for investors.
Similarly, 2019 will spark the beginning of new governments in some states across the federation. These states will have either consolidated or new policies, which may drive economic activities uniquely away from past administrations. Again, contracts and appointment lobbying will also form a block on its own. All these interplays are likely to redistribute income in some ways, and the real estate sector is likely to benefit in no small measure.
How the economy reacts
Growth in the real estate sector in Nigeria will have impact on the economy significantly, from the jobs it creates to revenue generation.
Specifically, the real estate’s multiplier effect in terms of job creation is significant. Also, real estate activity stimulates the economy indirectly through the value-added impacts of the purchase of goods and services that stem from real estate-related businesses and transactions.
Elon Musk to offer $100 million prize for best carbon capture technology
Elon Musk has announced a donation of $100 million prize money for the best technology that can capture carbon dioxide.
Tesla Inc CEO Elon Musk on Thursday took to Twitter to promise a $100 million prize for the development of the “best” carbon capture technology.
Elon Musk wrote in a tweet, “Am donating $100M towards a prize for best carbon capture technology,” details next week.
Carbon capture technology is designed to prevent the release of CO2 generated through conventional power generation and industrial production processes by injecting the CO2 into suitable underground storage reservoirs.
According to Reuters, “Capturing planet-warming emissions is becoming a critical part of many plans to keep climate change in check, but very little progress has been made on the technology to date, with efforts focused on cutting emissions rather than taking carbon out of the air.”
Since the tweet was shared, it has garnered thousands of responses from people because of the jaw-dropping cash prize. A lot of people have started sharing their carbon capture ideas.
The International Energy Agency said late last year that a sharp rise in the deployment of carbon capture technology was needed if countries are to meet net-zero emissions targets.
Newly-sworn-in U.S. President, Joe Biden has pledged to accelerate the development of carbon capture technology as part of his sweeping plan to tackle climate change. On Thursday, he named Jennifer Wilcox, an expert in carbon removal technologies, as the principal deputy assistant secretary for fossil energy at the U.S. Department of Energy.
Besides Tesla, Elon also heads rocket company SpaceX and Neuralink, a startup that is developing ultra-high bandwidth brain-machine interfaces to connect the human brain to computers.
WHO warns Africa in danger of being left behind in Covid-19 vaccination
The WHO has warned that Africa is in danger of being left behind in Covid-19 vaccination.
The World Health Organisation (WHO) has warned that Africa is in danger of being left behind in Covid-19 vaccination as countries from other regions strike bilateral deals, thereby driving up prices.
This follows the development and approval of safe and effective vaccine less than a year after the emergence of the coronavirus pandemic, regarded as a stunning achievement.
This disclosure was made by the WHO’s Regional Director for Africa, Dr Matshidiso Moeti while speaking during a virtual press conference which was facilitated by APO Group.
Dr Moeti was joined at the press briefing by the Managing Director, Country Programmes, Gavi, Thabani Maphosa and UNICEF Regional Director for Eastern and Southern Africa, Mohamed Fall.
What the WHO’s Regional Director for Africa is saying
Dr Moeti stated that as of early this week, 40 million Covid-19 vaccine doses have been administered in 50 mostly high-income countries with Guinea being the only low-income country on the continent to have provided doses to only 25 people so far.
According to her, Seychelles is the only high-income country on the continent where a national Covid-19 vaccination campaign has started.
She said, “We first, not me first, is the only way to end the pandemic. Vaccine hoarding will only prolong the ordeal and delay Africa’s recovery. It is deeply unjust that the most vulnerable Africans are forced to wait for vaccines while lower-risk groups in rich countries are made safe.
“Health workers and vulnerable people in Africa need urgent access to safe and effective COVID-19 vaccines.’’
What the Managing Director, Country Programmes, GAVI, is saying
Mr Thabani Maphosa, the Managing Director, Country Programmes at GAVI, a partner in the alliance, was quoted as saying delivery would begin soon.
He said, “COVAX is on track to start delivering vaccine doses and begin ensuring global access to vaccines. This massive international undertaking has been made possible thanks to donations work towards dose-sharing deals and deals with manufacturers that have brought us to almost 2 billion doses secured. We look forward to rollout in the coming weeks.”
What you should know
- COVAX facility is an international alliance which is backed by the WHO, Gavi, the vaccine alliance and Coalition for Epidemic Preparedness Innovations (CEPI), to ensure equitable distribution of the Covid-19 vaccines among all countries regardless of income level.
- The alliance has secured 2 billion doses of the Covid-19 vaccine for Africa from 5 producers, with options of over 1 billion more doses.
- COVAX has committed to vaccinating no fewer than 20% of the population in Africa by the end of 2021.
- Priority will be given to health workers and other vulnerable groups, such as older persons and those with pre-existing health conditions.
- An initial 30 million vaccine doses are expected to begin arriving in countries by March.
- The United Nations in its report said that a maximum of 600 million doses will be disbursed, based on 2 doses per person.
Google threatens to remove its search engine from Australia due to media code
Google has threatened to remove its search engine from Australia due to the media code introduced by the government.
Google said that it will disable its search engine in Australia if the government proceeds with a media code that would force it and Facebook Inc to pay local media companies for sharing their content.
The code requires Google and Facebook to enter mandatory arbitration with media companies if they cannot reach an agreement over the value of their content within three months.
It also requires the platforms to give the news businesses 14 days’ notice of algorithm changes, and non-discrimination provisions have been put in place to stop the tech giants from taking retaliatory action such as removing content or punishing organisations that participate in the code.
Mel Silva, Google Australia and New Zealand VP told Australia’s Senate Economics Legislation Committee today that Google would shut off the search in Australia if the government’s proposed media bargaining code becomes law. According to her, “The code’s arbitration model with bias criteria presents an unmanageable financial and operational risk for Google”
Australia announced the legislation last month after an investigation found Alphabet Inc-owned Google and social media giant Facebook held too much market power in the media industry, a situation it said posed a potential threat to a well-functioning democracy.
Prime Minister of Australia, Scott Morrison said Australia would not respond to the threats as news media companies fired back at suggestions their content did not add value to the platforms. “Australia makes our rules for things you can do in Australia. That’s done in our Parliament. It’s done by our government, and that’s how things work here in Australia,” he said. “People who want to work with that, in Australia, you’re very welcome. But we don’t respond to threats.”
What you should know
- Google’s threats follow similar remarks made by Facebook Australia’s managing director, Will Easton in September, who announced plans to remove news articles from the social media’s main app if the media code is passed by Parliament.
- To avoid the operation of the code, Google and Facebook have no option but to cease linking to news altogether. If Google can’t reliably separate news results from other search results, then logically it may have to pull its entire search service from Australia.
- Google’s threat to limit its services in Australia came just hours after the internet giant reached a content-payment deal with some French news publishers.
- This new media code will affect millions of Australians who use Google Search and Facebook every month.