‘Engineers engaging in property valuation will stir mispricing of assets’
Victor Adekunle Alonge is the Chairman of the Abuja branch of the Institute of Directors (IoD). He is also the chairman, Professional Practice Committee, Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON). In this interview with Property & Environment Editor, CHINEDUM UWAEGBULAM, he spoke on the incursion of engineers into valuation practice, professional indemnity insurance and other issues.
In Nigeria, the issue of Professional Indemnity Insurance has not been taken seriously, and many professionals have paid dearly for it? Why do you think it is necessary for government and professional bodies to adopt mandatory indemnity insurance policy?
Professional Indemnity Insurance as the name indicates is actually an insurance product designed for professionals and organisations, which covers them in the eventuality of certain outcomes during the course of their usual business practice.
The policies cover such things as professional negligence, errors or omissions, breaches of professional duty or conduct and civil liabilities. This type of insurance thus makes it possible for professional to continue to work without the fear that they may, at some later date, be sued by a client or a third party for problems that occur as a result of their professional activities.
A good example in my own profession is when a valuer is given an instruction to carry out valuation, and in the course of carrying out his duties; mistakes were made, which if proven to be negligence, would be covered by indemnity insurance.
The importance of it, apart from providing professionals’ greater confidence and peace of mind to carry out their work, is that it provides clients with security. It allows the economy to actually function at optimal level and provides interaction that is necessary for business to grow.I’m not aware of professional practices paying dearly for it. In the built environment, professionals have not been found culpable. Clients have actually paid dearly for lack of Professional Indemnity Insurance because in cases where professionals have misadvised a client, the clients have taken the bills and the professionals walk away.
With the new realization and globalization in business and practices, clients are beginning to ask questions, demanding what is obtained in other jurisdictions, so that professionals can become more accountable and responsible to their services. The professionals are saying that if all these were in place, it would have to translate to better appreciations of consultants’ services in terms of better remuneration. The days of paying professionals peanuts will now have to be over. As a regulatory policy, my profession has adopted it, and estate surveyors and valuers will now carry Professional Indemnity Insurance as a regulatory requirement.
In time past, there has been a running battle between Nigerian Institution of Estate Surveyors and Valuers and Nigerian Society of Engineers over plant, machinery and equipment valuation. With judgment in 2011, we thought the matter has been rested. What has been the position?
The truth of the matter is that engineers cannot be valuers. They are not trained to be valuers, estate surveyors and valuers will not be engineers, so engineers can never be valuers. One of our senior colleagues, M.A. Belo, took this matter to court; he got judgment to the effect that engineers are not valuers. The only profession actually recognized by law and entitled to practice valuation in this country, is estate surveyor and valuers. That remains the position in law and practice, even in other jurisdictions like the United Kingdom and United States of America.The point is that when you have specialist valuation that includes engineering component, then it would be important that engineer’s input are sought by estate surveyors and valuers and we have been doing that.
In the valuation of NEPA assets in the 90s, that was what we did. When this issue came up, the former Minister Mamman Kontagora, an engineer, clearly called the parties, and established it: that as far as the law is concerned, the only profession entitled to actually put value on assets, whether engineering or power and marine assets is estate surveyors and valuers. Even though valuation of NEPA assets is engineering assets, the valuers are the ones to do it. Then, estate surveyors and valuers collaborated with engineers to ascertain the value of the assets.
What is happening now is that the engineers are entrenched in government, like in the Bureau of Public Enterprises, Bureau of Public Procurement and federal ministries and the leadership of the engineering profession wants to use the opportunity to expand their turf and move into other people’s territory. The point is that, it is not a crime to do that, but we estate surveyors and valuers must have to be vigilant, ensure we don’t become complacent and allow such incursion.
My profession is essentially a public interest job, we exist for public good and it is important we protect it. What caused the subprime mortgage crisis in the United States; is mortgage mispricing of property asset and over valuation. When engineers are allowed to value, when they are not valuers, it will results to mispricing. There is a different between cost and value. In other words, because you manufacture does not mean that you’re trained to value. Pharmacists manufacture drugs but they don’t prescribe. Doctors diagnose and then prescribe appropriate drugs.
In our case, valuers take assets, look at the specific or peculiar situation of the assets, the manufacturer’s history and then situate it within the market. Then come up the market interpretation of the value. That is valuation.The professional bodies need to borrow a leaf from what is obtainable in other jurisdictions; there is a need for proper collaboration and understanding. The turf is wide enough for all of us to practice and collaborate. No profession can exist in isolation. We need to work together.
This valuation issue, apart going to court was taken to the Association of Professional Bodies of Nigeria, the body sat, gave judgment in favour of the estate surveyors and valuers. There is no absolute reason why engineers should continue to dissipate energy unnecessarily on this issue, rather they should start looking at how we can work together to optimize the value of our national assets for the benefit of the people.
Currently, about 80 per cent of Nigerians don’t have land titles and can’t use such for mortgage. Why do property owners shy away from land titles? How do government ensure that every property has a title?
I was a member of the Vision 20:2020 steering committee on housing. The issue of land title took a centre stage, because without title, the real estate assets are dead assets. The land title system in the country is cumbersome, fraught with corruption and frustrating. I cannot understand why we cannot have titles issued within a week. In some countries, you perfect your title within three days. Unfortunately, what that means is that property owners cannot use it for economic purposes.
It is important for government to simplify the land title system, because that helps the economy. You can imagine what impact it will have in the economy if at least 60 per cent property owners have titles. It is not about cutting the charges; it is about making the process to be transparent. The whole process is shrouded in secrecy, and when you have that level of secrecy, you create opportunity for corruption and touting.
In some States, you can buy a property, for years you won’t know where to perfect the title. Land administration system has to be looked into. My profession has submitted several papers to government, even at the National Conference, and we presented our position. Land is a key resource; a country that does not properly harness its land assets can hardly develop.
Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) has faced some criticism from its fold, especially for not doing enough to increase membership. For instance, with Nigeria population of about 180 million, we have less than 5,000 estate surveyors servicing the populace. Why is it like this?
Estate Surveyors and Valuers Registration Board of Nigeria is a regulating body for estate surveying and valuation in Nigeria. When you look at the last two years, the board has done extremely well in terms of licensing estate surveyors and valuers. Also, understand that the board has education and professional training requirements. Those who go through such are eligible for license. In the last induction in December, in the history of the board, we recorded the largest induction of members. In terms of registering estate surveyors and valuers, we’re doing our best. The point is that we cannot because of quantity; sacrifice the quality in the profession.
We’re now encouraging higher institutions of learning to increase their intake of those studying estate management and also for schools to establish programme in estate management. For instance, University of Ibadan started estate management programme last year and some other universities. The more the universities and polytechnics that offers estate management, the more probationers and the more members. We’re also encouraging probationers who have stayed longer on the programme to come up.
Four years have rolled by since ESVARBON approved the use of pseudonyms for persons who desire to practice with names other than family names, to encourage best practices and attainment of international standards. For now, we have not seen any change in the profession in that regard. Why is it so?
It is so because change is a very difficult thing. If we have been doing it a long time, it becomes our culture. Yes, it has not happened, but does not mean we have jettisoned it. It is a voluntary thing, and members are still looking at the appropriate structure for a mega practice. Pseudonym names are a prelude to mega practice. Mega practice is actually necessary for strength and expertise in bidding for jobs, even executing it.
You were recently elected the chairman, Abuja branch of the Institute of Directors (IoD), as an estate surveyor and valuer, what are your plans for the organization?
It is an opportunity for my profession to be better understood and embraced, and also for the skill of an estate surveyor and valuer to be used. IoD is an organisation for private and public sector directors as well as policy makers. I’m looking forward to using that platform to sell my profession so that the members will appreciate what estate surveyors and valuers stand for. And be able to sell IoD to our members, we need them, especially those of us that are qualified to join. The institute has lofty objectives and actually for public good.
No Comments yet