Red Tapism simply defined is the practice of requiring excessive paperwork and tedious procedures before official action can be considered or completed

Imagine yourself, wanting to start your new retail business. You have somehow purchased a piece of land in prime location and you wish to erect a structure within which your commercial activities. Well, according to the the World Bank’s annual Ease of Doing Business Report for Nigeria, if you follow the necessary requirements to secure your construction permits, business activity certification and what ever else is under the laid down law of what you need to do to open the structure for public use, you can spend up to 116 days (near 4 months) on the process with fees that can run you up to N8m Naira.

Now imagine what the costs would be if it were for a multi-residential development, you can be sitting on your hands, haemorrhaging money while awaiting the authorization to commence construction.

This scenario described above is for someone who already has all their financing in place. What if we look into the process of applying for financing or a mortgage; prior to the establishment of the Nigerian Mortgage Refinancing Company, the process alone could cripple you; and until the NMRC is fully operational, the average person looking to undertake a real estate project will continue to face these unnecessary setbacks as they go along the way. Requirements include financial documents and materials that sometimes do not exist in an economy like Nigeria where the informal sector accounts for a significant source of financing for real estate investment and projects.

Why do these constant bureaucratic processes exist? Why do they seem more punitive to those who are compliant than those who flout the processes? If they were initially designed to ensure order and safety in the built environment, why are they cumbersome and so capital intensive? Is it no wonder that the average developer is more inclined to do things “under the table” and move their projects swiftly along to delivery. If all the developer’s money is spent on the construction process, is there no wonder the cost of quality housing has gone through the roof, making access to affordable options an elusive reality? How do we change this?

Red Tapism is a major concern to us at 3Invest and upon consultation with our extensive network of real estate practitioners; we got an overwhelming response on how red tape and bureaucracy are negatively affecting the industry’s ability to maximize on its potential. So, as a platform for change in Nigerian—and subsequently, African—real estate, we decided that it was imperative that this issue receives center stage at the upcoming 2014 Real Estate Unite Conference taking place October 2^nd – 3^rd at the breathtaking Intercontinental Hotel.

This year’s theme is “Igniting the F.I.R.E: Where Lies The Key”. F.I.R.E is an acronym for the four key factors that we at 3Invest—and many others in the industry—believe demand immediate attention because they are what will ignite the catalytic pace of growth in the sector. F is for Finance, I is for Infrastructure, R is this crippling issue of Red Tapism; and E is Education. We are offering a high level panel discussion on this issue lead by Hakeem Ogunniran, Managing Director, UACN Property Development Company (UPDC) and it will culminate in a live debate where we hash out which of these hold the key to Nigeria’s real estate sector’s future. I daresay that it is the eradication of red tape by streamlining processes and simplifying the regulation to be friendlier to the developer and real estate practitioner. Come October, we will find out who else shares my views.

We urge you to register for our third instalment of Real Estate Unite. We have made the process so easy and removed all red tape because we know how important your participation is in addressing this issue. This event is an unprecedented opportunity to really shake up the systems and be and grow this sector that currently contributes around 7% of national GDP into prominence.

Who’s with us? See you at the 2014 Real Estate Unite.

Communications

3Invest

 

 

 

2014-08-21