Cash crunch has drastically reduced productivity in the Real Estate business — Olusegunbiyi Samuel
The ongoing cash crunch occasioned by the Central Bank of Nigeria’s policy on the naira redesign and cash withdrawal limit has abruptly stopped economic and service delivery in the real estate environment, this was revealed in an interview with a property developer, Mr. Samuel Olusegunbiyi who spoke to our correspondent and insisted that the inability to pay artisans, provide building materials for construction and increased cost of production had halted any form of revenue generation in the industry. He further predicted that this might affect the sector’s gross domestic product contribution and lead to an increase in housing deficits.
Tell us about your brand sir?
Teleiose Contracting Limited is a registered Real Estate Development Company that offers services in Real Estate, Building Development and Interior Design work.
Since inception in the year 2017, the company has handled a couple of projects in building design and development within the county most especially Lagos.
The company is affiliated to other big real estate brands which they work together in sales of property.
The interior design department of the firm has executed a wide number of projects both for corporate and individual entity.
Teleiose offers full customer support program for those interested in Real Estate investment, Joint Venture and sales of properties.
Teleiose Contracting Limited has a good number of competent staff that make our work effective and efficient.
Are you planning on investing in real estate, development your project or creating magic at your space, we are just a call away. Our office is located at Ogba, Lagos.
How did you find yourself in Real Estate business?
It has been a passion I developed since I was in my finals in school. I love the building construction works because of the creativity that comes with it. Real Estate for me is more like a value adding opportunity. I ventured into it so as to fulfill my long dream of creating relatively affordable and quality housing for people.
The challenges of getting affordable shelter in African is fast rising daily and we need more people who can tackle the challenges. For me as a developer and builder, I would like to see that one day, a common man can have access to good shelter at an affordable cost.
In what way has this naira scarcity in Nigeria affected the Real Estate business?
Nobody actually saw this new development coming. It has happened for the first time and everybody is just trying to look for a way out. Real Estate is etched around cash both in liquid form and physical form. This is a business that requires naira at every level of transaction and stage.
The scarcity of naira has drastically reduced the productivity of work for those developing a project and it has reduced the rate of building purchase due to low efficiency from the mobile app transfer.
The cash crunch made the pricing of things move differently. It gives room for shortage of labour as most of our artisans and unskilled labor do not use bank and they receive their wages daily after work, with scarcity of naira, paying their wages was made difficult as many of our workers do not use bank account and those who use are afraid of the exaggerated charges from the PoS agents.
Most of these artisans don’t have a bank account, they feed from hand-to-mouth and if you want to transfer their daily pay, they will ask you for cash payment instead. If they agree to transfer, you would have to add charges, increasing the production costs. Cash scarcity, I must say, has made dealing with artisans really expensive.
A particular worker working on our project had to be going from one PoS agent to the other before he could cash out the 10,000 naira workmanship we paid him for job he did.
It also increased wastages and loss of capital due to exorbitant POS charges. For instance, the other day at the site, we needed some cleaners who had never worked with us before as it was a new project site, to help us clear the site and park the waste away, not only did we experience delay as they refused to take transfer, we had to go use PoS and you know the charges on PoS these days are crazy and by so doing, it’s entering into our profit margins, and delaying work pace. The level of production had reduced drastically because labourers who were supposed to work on-site left because they wanted cash payment and didn’t have a bank account.
We had to increase the workload on those who have an account so we could achieve something. Presently, work on-site now is not full scale.
Some of them even think we are being wicked because they don’t believe that we don’t have the cash to pay them.
Another way it has affected the Real Estate market is the increase in the cost of materials.
A lot of sellers are refusing to collect transfer due to Mobile bank transfer issue which causes long delay before the receiver gets the money, most times those who are taking transfer will charge you more as they also will need to use PoS to get the cash out. Recently, we had a project where we had to deal with carpentry and on getting to the market; they declined transfer, demanding for cash payment. Already, paying these charges is eating up profits.
I can also remember one time we were to purchase tiles for one of our renovation projects in a new area. They demanded we add 200 naira to each of the cartons we were buying so he can use that to get his cash out.
Other ways are scarcity of building materials, Panic buying, Fraudulent Business transaction: most people lose money due to failed business transaction. Some were sharing fake alert receipt during the process to mention but a few.
Where do you see your brand in the next five years?
Our next five years plan is to grow to a big brand both within the country and international market.
We plan to establish at least 5,000 automated smart homes within the next five years.
We also plan to increase our staff strength to more than 80 people working with us full time and more than 100 staff as contract staff and artisans.
We also plan to have a building of our own as an office outlet in Lagos and Abuja.
What kind of support should the government give to the housing sector to enable it to grow?
Stakeholders in Nigeria’s real estate sector are hopeful that the expected new administration in the country to be headed by President-elect Bola Tinubu will create the right environment and policies to drive growth in the secto. As a business-minded person that is well disposed to the private sector, Mr Bola Ahmed Tinubu will come up with policies that will encourage the business community to invest in the economy.
Government should make policies that help protect the investors and developers, form partnership in the area of mortgage with real estate developers so they can be able to access funding for their development.
We hope that economic activities would also increase; leading to the creation of better paying jobs that would enable the workers to take mortgage and buy homes.
Housing does not exist in a vacuum; there must be a critical mass of buyers in good paying jobs for it to thrive and we only need good economic policies to drive all that.
We look forward to improved focus on property dealings; a policy to liberalise homeownership; opening up of new towns and cities; there will be more investment and enabling environment in terms of infrastructure provision.
While we are commending the efforts of government in the areas of security, we will kindly implore that they do more so more investors can come into the country to invest in real estate.
