Why you should care

This infamous Nigerian city could be Africa’s exemplary megalopolis, if the outsized rents don’t give everyone grief.

With its pastel-colored mansions, verdant lawns and sculpted gardens, Banana Island is among the world’s most luxurious neighborhoods. It could even be one of those fantastical creations off the coast of Dubai. Instead it’s in a gritty African megacity better known for insecurity, traffic jams and sprawling seaside slums: Lagos.

Without a doubt, Nigeria’s commercial capital is the hottest place to live in Africa right now, and one of the hottest in the world. Nigeria’s oil-fueled economy is blazing, posting 5 to 8 percent GDP growth every year for the past decade. In Lagos and its environs, crazy construction projects go up by the week, the airport’s expanding and the cultural scene is taking off, too. (It’s not just Nollywood, anymore, but literature, art and fashion.) “It’s a party city,” says Olamide Udo-Udoma, a Nigerian expert in city planning and founder of the nonprofit think tank Future Lagos.

[Finding a house is] pretty much impossible for low-income earners.

—Olamide Udo-Udoma, founder of nonprofit think tank Future Lagos

But that’s only if you can find a place to rest your weary head — for even in a city high on high-rises, the housing stock is seriously stressed. With 21 million people, Lagos is already Africa’s most populous city. Now it’s swelling fast enough that it could be the world’s third-largest megacity by 2015, after Tokyo and Mumbai. Experts say the country will need more than 20 million new homes by 2025 to cope with the growing demand, and Lagos is the epicenter of the building boom. Finding a house is “pretty much impossible for low-income earners,” says Udo-Udoma. She recently decamped for the U.K.

Other megacities have faced housing strains, of course, but Lagos is not well equipped. Unlike Dubai, reclaiming land from the sea isn’t just an option for Lagos, because much of the metropolis sits below sea level and is vulnerable to flooding — all the more so as climate change raises the seas. So the city has taken to stopping the Atlantic waves by building walls and artificial barrier islands. The epitome of all this is Eko-Atlantic, a $6 billion city built on man-made sandbanks that promises to help protect landlubbers from the ocean while housing about 250,000 very wealthy people. Dozens of other pharaonic projects are underway.

Rental stock has grown fast, but many apartments are beyond the means of even the middle class.

They won’t solve the housing needs of most of the city’s inhabitants, 70 percent of whom live in densely populated slums. Lagos is Africa’s most unequal city, and most construction is focused on the higher end of the market, from oil barons to Nigeria’s fast-growing middle class. So while skyscrapers house the business elite in Victoria Island and young well-off entrepreneurs move to Lekki — a hip, slightly cheaper neighborhood on the coast — many Lagosians are stuck in communities like Makoko, built atop Lagos Lagoon, a watery slum where thousands have to paddle dirty water every day to go get potable water. Real estate expert Obi Ejimofo calls it a “major contradiction between supply and demand.” At Lamudi Nigeria, the online real estate company where he is managing director, most users are looking to rent, but most property is available only to buy.

To be sure, most of Lagos’ residents, who are poor, don’t exactly shop for real estate online. For those higher up the income ladder, rental stock has grown fast, but many apartments are beyond the means of even the middle class. Rents are rising an average of 20 percent every couple of years, according to Isaac O. Sobotie, an official at the country’s Quantity Surveyors Registration Board. Insult to injury: renters need to pay at least 12 months in advance and sometimes a full two years.

One solution could be to facilitate mortgages — interest rates now stand at a difficult 17 to 21 percent, which is why only about 5 percent of Nigeria’s houses are mortgage-financed. A new local mortgage scheme backed by the state government offers a 9.5 percent interest rate over 10 years. Meanwhile, the government is trying to increase housing stock by buying houses and building new ones. So far it has completed more than 1,000 housing units dedicated to the scheme and is building more than 3,000 others.

This is all just a dent, of course. “They are trying to be proactive, but there’s a lot more that could be done,” says Udo-Udoma. She suggests requiring developers to set aside 20 percent of units for low-income families, as New York City has done. The other missing piece of Lagos’ construction bonanza is infrastructure. Electricity is intermittent for most of the city, and large swaths lack access to running water. The sewage system is overwhelmed, though a new water waste treatment plant is in the works as are prosecutions against illegal sewage dumping.

So it’s still a long way to Dubai luxury. Unless you’ve got a few million dollars to buy into fantasy island.

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