On one of his quarterly trips to Nigeria, Emeka Hamilton accompanied a real estate developer to visit a site in Banana Island, one of Nigeria’s most luxurious estates.
Soon as they approached the gate, security asked them for the entry code, a requirement for gaining entry into the luxurious estate. Mr. Hamilton watched in awe as the security guard punched the code into his mobile phone, confirmed it, and granted them access.
As they drove into the estate, Emeka was amazed by the paved roads, street markings, and beautiful landscaping synonymous with nearly all the streets his eyes could see. He couldn’t help but ask:
- “How is this place maintained so well without help from the government?”
Since the establishment of Bodija Housing Estate in Ibadan in 1959 by the Government of the Western Region of Nigeria, residential estates have sprung up all over Nigeria. Today, Gwarimpa Estate in Abuja is Nigeria’s largest single housing estate while Banana Island in Lagos, on the other hand, is considered one of the most expensive pieces of real estate in Nigeria.
The estates through their own associations have grown to represent the wishes and living aspirations of their members, taking collective decisions to the benefit of their residents. In better-organized estates, house values are also positively impacted giving prospective house owners an incentive to own properties.
How do these estates manage themselves and how are they government? Who funds their activities and how are they, accountable to residents? What legal standing do they have to charge estate fees and to who do they pay taxes?
Ownership structures: Most estates in Nigeria are either government-owned or privately owned. Two perfect examples of government-owned estates are the Gwarinpa Estate in Abuja and Magodo Phase 1 in Lagos. On the other hand, Victoria Garden City and Parkview estates in Lagos are examples of privately-owned estates.
- The initial ownership of an estate typically influences the management structure it adopts. Community Development Associations (CDAs) were established in previous government-owned estates, while Homeowners & Resident Associations were established in private estates.
- A typical Resident Association will have a Chairman, Vice Chairman, Secretary, Treasurer, and Financial Secretary, amongst others who are elected to renewable two-year tenures, subject to the bye-laws of the association.
- All financial members of the Association are eligible to vote and be voted for in mostly secret ballot elections.
- In some estates, eligibility for executive positions is restricted to only homeowners. For other estates, every due-paying resident is eligible for election. For example, in Victory Park Estate in Lekki, you must have paid your service charge obligations and have 50% meeting attendance to be eligible to contest elections.
- Once an executive committee is elected, they can appoint a Facility Manager and delegate the daily administration of the estate to him or her. This structure is similar to how the local government offices operate in a democracy.
The estates are also given legal connotations when they register under the Company and Allied Matters Act as not-for-profit associations. This allows them to take collective decisions that are binding on registered members. Most importantly, it allows them open bank accounts from where estate projects and expenses are funded.
Estate elections: Estates rely on their bye-laws to conduct elections similar to provisions of any democratic government.
- Just like the government, members seeking to be elected must meet minimum requirements such as being financially compliant, living within the estate, and attending meetings.
- Residents must also meet minimum requirements to be able to cast their vote and elect new leaders.
- There are also votes or in some cases appointments into committees and sub-committees of the estate, tasked with achieving specific objectives.
- Elected officers are also tenured and have opportunities to seek re-election in some cases.
These rules suggest it is more stringent to be elected in a resident association compared to a local government in Nigeria. Whether this is the reason why resident associations seem to work efficiently is subject to debate.
An estate manager who spoke to Nairametrics revealed there are a lot of incentives exco members of estates benefit from.
- For example, Exco members have access to information such as who is selling or buying properties, often partaking in juicy commissions.
- Some engage in back-end deals with service providers or contractors often resulting in millions of naira in kickbacks or commissions.
- Estates with significant size in residents are often courted by politicians looking for votes and influencers within communities of interest. This provides access to exco members that is often used to further their own business and sometimes personal interests.
- For some members, it is simply to seek relevance and influence, allowing you to be involved in governing and effecting positive changes in the community where you live.
We also have squabbles: However, as with anything involving executive positions and money in Nigeria, these elections can take a turn for the worse.
- In 2020, Magodo Phase II Residents Association was suspended by the Lagos State Ministry of Local Government and Chieftaincy Affairs as the election became a source of discord with the potential for violence.
- A similar incident happened in NICON Town in Lekki where two sets of exco are currently in court to determine who controls the management of the estate and by implication and its finances.
- In some cases, disputed elections result in factions being created within the same estate suggesting that there is more to the eye can see than just serving the estate.
Operations of Exco and Committees: Now, unlike the free-spending executives at the Local Government Areas who are paid employees of the people who elected them, the jobs of resident association executives are voluntary and therefore largely unpaid.
- Knowing this, one then wonders why there can be such rancour in estate politics as residents justle for elected positions for which they are not paid.
- The suspicion is always that some residents want to do more than just “serve” the people. In other words, they would rather steal from the resident associations when elected.
- But residents who pay levies expect to see verifiable proof of what their funds are being used for. Regular publication of audit reports conducted by external auditors and greater transparency regarding income and expenditures are one-way executives are held to account.
But as the organization and needs of estates become more complex, the Executive Committees in some estates have ceded control to private organizations who not only run the estate but also provide platforms and solutions to better manage them.
- This is also out of operational expediency because unlike politicians their executive positions are not full-time jobs.
- To deliver on tasks, they often rely on third parties to provide services that are professional in nature and time-consuming. Members of committees are also carefully selected based on their professional careers to provide guidance and oversight for third-party consultants.
- For some less financially rich estates who can’t afford the services of consultants, committee members do the work themselves.
The only difference between estates and LGAs is the absence of any allocation or subvention to the Resident Association from any quarter, unlike LGAs that receive monthly allocations from the federal government.
Estate dues are like taxes: The main source of income is annual dues paid by the homeowners and residents of these estates. They also charge all sorts of ancillary fees and sometimes levy residents with Adhoc fees geared towards addressing a short-term challenge.
- For instance, Magodo Phase 1 residents pay N75,000 per annum into the estate purse and a further N15,000 to the smaller resident group with which each resident is associated.
- Residents of Banana Island in Ikoyi pay annual dues of N250,000 each, while residents of Victory Park Estate in Osapa pay N515,000 per annum.
- These annual dues cover things such as security, waste disposal, cleaning of common areas, powering the streetlights, and estate beautification.
- Based on the differences in dues, it’s obvious that the size of an estate often determines how much the levies are. The larger the estate and number of residences, the smaller the levies. That’s because the total outlay is spread across more paying residents.
Sources from Nigerian banks who spoke to Nairametrics on the condition of anonymity indicate some estates have in their bank accounts excess of between N100 million to N500 million. Some residents of the cash-rich Banana Estate suggest their treasury can be in billions of naira.
What are the dues used for? Depending on the estate and its constitution, estate dues are used for several common services. Some of the most important ones are security, cleaning, landscaping, recreation, utilities, roads, sewage, gutters, etc.
- Water is one of the basic amenities provided by the estates to all homes. A central water plant is maintained by the estate management from which all homes are supplied clean water. And levies by residents are used to finance such projects.
- Considering the noticeable absence of public water supply in most cities across Nigeria, this is a commendable accomplishment by many estate managements.
- Another major reason gated estates exist in the first place is the need to ensure collective security. But besides the high fences and gates, security personnel are often employed to enforce security measures. Doing this requires money, hence the estate levies.
- Estates also utilize their dues to maintain common areas as well as utilities available for use by any member.
- Some estate budgets also include the building and maintenance of access roads, landscaping, and other amenities.
Service providers for estates; To collect, spend, record, reconcile and publish details of estate financing is a hugely complicated task for any estate executives. Identifying the right service providers for mega projects within these estates is also a major consideration.
- Chude Osiegbu, a Software Developer and CEO of Venco which provides automated services in various estates in Nigeria, told Nairametrics that his company created a fully integrated system containing a directory of all property owners/residents. This helps to vend services such as power and water through a funded wallet.
- “Access control systems are always one of the most sought-after systems by many estates. This can be a boom bar or turnstiles that provide the physical side to the access control mechanism, enabled by virtual codes generated by the app.”
- “Access control is integrated such that residents who default on their service charges or security levies are disallowed from generating codes for visitors. As such, when they have visitors they have to go to the gate to clear them in.”
- Apart from access control systems, Venco is in use in Banana Island for utility vending. They also provide services to estates such as 1004 estate, Royal Estate in Port-Harcourt, etc.
- Meanwhile, many smaller estates use a system whereby residents call the security gatehouse to grant access to visitors.
Another ubiquitous service provider, Clannit, allows residents to chat, collect funds, invite guests, and raise alarms in emergencies all within their app.
- The company was founded in 2020 by Deola Adejuyigbe to help members of communities to engage and trade with each other.
- Clannit app is used in over 40 estates according to data on its website allowing residents to provide entry access into their estates, transact and even chat.
The estates have now become a major target market for tech startups looking to provide services directly to households. Starting with a vertical, these startups go from just providing tools for access control to leveraging data to veer into e-commerce, fintech, and even advertising.
Size matters: Some estates also rely leverage on their size to attract utilities such as 24/7 electricity providers, internet service providers, and even centralized water systems.
- A case in point is the premium power electricity supply between Ikeja Electric and the residents of Magodo, Ikeja GRA, and Ogudu GRA in Lagos.
- Some residents in Lekki Phase 1 also recently signed a contract with Eko Electricity Distribution Company and an independent power provider to provide a 24/7 power supply.
- These are all services that may have been provided by local government, but estates associations have figured out an excellent way to deliver the same.
Should estates replace LGAs: Replacing the Local Government system is a constitutional issue and is unlikely to pass at the National Assembly or State Houses.
- The Local Government system is a patronage system that politicians and the state requires to be in existence so that through it, they can continue to dispense patronage and earn political capital.
- Long term, Resident Associations can only play a complementary role to the Local Governments and not compete with them.
- An official of Eti-Osa LGA who wished to be named told Nairametrics that most of the equipment and expertise used in the maintenance of the estates are often provided by the LGAs.
To a large extent, estates and LGAs have found many areas where they can work together for the benefit of the citizens.
But the question remains – how are these private enclaves able to achieve what seems to evade local governments?
- The first thing is accountability and citizen involvement. People don’t just pay their dues and move on, instead, they get involved and demand accountability from their representatives.
- The second reason is that elected officials live in the estates and encounter the same problems as other residents.
- This prompts them to proffer solutions to said problems, unlike LGA executives who often reside elsewhere.
- Responsibilities are assigned (Exco assigns and monitors the Facility Managers) and measurable performance metrics are set and measured.
Nigeria’s local government system is enshrined in the country’s constitution. Decades of mismanagement of taxpayers’ money and lack of accountability perhaps explain why it has not worked. Those seeking better representation of public office holders in local governments should borrow a leaf from how resident associations are governed.