Some months ago ,we publish the first part of of this article and here we make the conclusion as noted below by the blogger though the third part shall be based on the current administration policy on governance .Enjoy the reading .
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Be that as it may , with over 3.6million Nigerian workers registered under the scheme ,a meager portion of the over the over 50 million active working population in the country generating a billion naira monthly ,majority of Nigerians and even contributors still live in condemned slums and roaming houses .Stakeholders including civil servants have called for broadbased reform of the sector to avert the growing difficulties being experienced in accessing the public fund .Yet untamed ,they still try and push for transformation.
The mortgage sector operatives are bent on sectoral reforms in terms of comprehensive policy reform to integrate housing and housing finance sectors into the larger financial system and refines loan standard as well as its underwriting methods including national housing fund attractive to primary mortgage institutions –PMIs .
As part of the 15 page recommended reform memorandum submitted by mortgage banking association of Nigeria-MBAN to VISION20:2020 Secretariat of the National Planning Commission at the early period of the erstwhile CBN Governor Lamido Sanusi Lamido tenure ,expectations and optimism about the much vaunted reform went into full gear ,by taking action and calculated risk to move their nation ahead .The private sector proposal and such independent professional tips provided were aimed to jumstart and fast track the reforms in the country .In this context ,the following actions were recommended on the MBAN documents.These include --:
- The creation of a framework for the mobilization of a private sector funding into the sector and also providing basic opportunities or incentives for pension and insurance fund companies to partner with PMIs for the evolution of market based financial products saddled with bias to serve as launching pad for secondary mortgage operations inducing reduction in transaction charges in the sector in view of high cost being borne by homebuyers and structuring of special administrative apparatuses to reduce what it takes to access governors consent for mortgage ;
- The approval of national building plans and estate developments in all 36 States as well as expeditious passage of pending housing and housing finance and related legislation presently before National Assembly into law ;
- The facilitation of the issuance of limited guarantee scheme by federal ministry of finance –a proposition similar to U.S. Home Loans Bank to basically provide liquidity to PMIs –primary mortgage institutions empowering them to undertake bigger bets and more mortgage oriented activities to attain much needed housing supply expansion made possible through introduction of favorable fiscal policy and other relevant incentives to attract private sector funding ;
- To encourage federal government to jumpstart an infrastructural driven initiative handled by the States opening up new areas and districts in various townships ,development oriented to expand housing stock;
- Partial privatizations of federal mortgage Bank of Nigeria –FMBN with clearly defined charter and target codified with a set of critical functions operating as second tier institution in the mortgage market ,enhancing efficiency and development activities as well as facilitation of a highly competitive and vibrant market among existing visionary players.
MBAN notes prudent public sector policy roles ,continuous and progressive subsidies and incentives in the management of short term transition issues and market wide reform challenges is critical to long term sustainable economic development of the public institutions, housing and housing finance systems in the country .It believes rising cost of building materials has stalled the provision of affordable housing and supply of affordable mortgageable homes .It also campaigns for measures to tackle this problem and to set up specialized intervention funds to provide much needed infrastructure for private developers as temporary relief as nation anticipates the development and maturity of the bond market to fund urban infrastructural needs.
It also suggests critical measures be taken to address exigencies and issues such as liquidity risk,high interest rate risk,inadequate funding sources , poor information flow, collateral systems, lack of credit risk management and human capacity problems and lack of standardized loan products to allow borrowing against mortgage assets, securitization or more .
Moreover ,the Managing Director of FBN Mortgages Ltd. and also Vice President of MBAN Muhamed Santuraki like his coleagues also urged the CBN Governor during the same period to embark on broad based reform and revamp operative mechanism of NHF system and the FMBN to avoid bottlenecks and made loans available to all and sundry.However with the ascendancy of the CBN Governor a new vista was entirely opened for consolidation of the gains of the previous tenure .The emergence of the Nigerian Mortgage Refinance Corporation –NMRC – a public private sector participation corporation –PPP can be seen as an ideological reflection of some of the propositions and 15 recommendations of MBAN of the previous era.Its success alone in implementing the recommendations can go along way to resolve the industry inadequacies and sectoral hurdles .
Circumstances are quickly changing as policies, institution and legal systems mature. The new MBAN and NMRC President and also managing director of Homebase Mortgage bank-Mr Femi Johnson expressed optimism in the possible resolution of the predicaments facing sector and advocated a broad based framework as critical measures to resolve these challenges .In an interview with Daily Independent ,he also identified some of these teething problems such as lack of liquidity ,high cost of funds , ,lack of long term funds , lack of foreclosure rules ,poor legal system , lack of bonafide access to property titles and inadequate possession of property titles to mortgage creation and financing ,bureaucratic bottlenecks on land matters .Other practitioners also lamented lack of land availability and growing cost of building materials .Infact all 7 sectors in the construction and housing industry we re said to grossly affected by a host of wide ranging problems from materials , building to infrastructure among others in addition to mortgage provision cannot be treated in isolation.
With the launching of Nigerian Mortgage Refinance Corporation –NMRC, it is envisaged that more liquidity would be created to take the cash strapped industry to the next level .According to its corporate model ,NMRC as a PPP is a secondary mortgage company that will refinance mortgages being given out by PMIs or primary mortgage lenders and commercial banks operating mortgage business .NMRC in partnership with federal ministry of finance is set to create landmark 200,000 mortgages over the next five years funded initially by World Bank to the tune of $200 million-a sovereign fund out of which 50million will be used for the provision of micro housing finance for the benefit of the poorer classes not served by lower cadre informal sector lenders .
The main role of NMRC is not only to refinance loans from primary mortgage lenders but also to essentially to create a platform for long term finance currently not available in the finance sector by issuing and raising bonds in the capital market .This bond is guaranteed by federal government and backed up by people ‘s trust and confidence in the mortgage system and bond mechanism. Contrary to initial proposition its shareholding structure comprises of MBAN and mortgage Banks ,50 percent and 50 percent remaining taken up by other stakeholders including private investors and sovereign wealth funds taken up the balance.
It is set up to raise mortgage lending from its present moribund position of a meager 20,000 loans to over 200,000 mortgages in five years .This indicates holistically a housing at the rate of five million naira per unit ,about 1 trillion naira is to be into the system to create such type of mortgages and multiply mortgages or could be 2 trillion naira for houses of 10 million naira per unit.So ,World Bank roughly 50 million naira is a mere scratch on the surface on the surface giving the magnitude of funds at its disposal in the future or that is required to execute the gigantic mandate .
Frankly speaking , Federal government with its partnership with the States, for NMRC project implementation , almost all the recommendations of MBAN during the early period of the previous CBN regime is getting rich attention .The problem now is sustainability like previous policy regimes in the country .
It cannot be disputed construction plays a substantial role in the sustainable economic development of a nation irrespective of the existing levels of development and the available hurdles that must be surmounted to fulfill its goals of ethical control, professionalism and affordable housing for all –Ibikunle:2014;Zantandis and Tsiotras :1998].It generally employs between 2 to 10 percent of national workforce in most countries.Abdulrahman and Hassan ,2008].
However it remain debatable whether or not Nigeria had recorded an impressive economic growth over the last three decades .This evidenced by an increase in the rate of abandoned projects ,incessant building collapses and low quality In housing delivery ,professional incompetency and quackery ,bureaucratic bottlenecks , low level of local content in favour of the expatriate contractors and low level of finance options and sources and the rest of them .
Optimistically ,it could be a thing of history with the emergence of new mortgage company .It means mortgage Bankers can raise 10-20 years mortgage and then sell what they create up to the new mortgage company that will in turn issues long term bond affording to wait for the total loans to be paid out .Being able to access loan continually multiplies mortgages and would deepen the mortgage market through continuous and cheap access to fresh loans .Having access to longer term mortgages of 15 to 20 years directly by borrowers could easily be regarded as the best thing to have happened to the industry over the last 50 something years of nationhood and can be easily paid back than a medium term facility .With the additional 4 to 5 trillion naira pension funds if not still in deficit –an enabling environment is being created and could be a boon to the housing industry and economy in general if sustained and the new institution effectively run on the basis of economic expediencies.
Generally speaking,there are no long term funds in the Nigerian economy especially the banking industry and the available funds are short term funds of 90 days or maximum of a ear facility So trying to lend short term facility as long term fund could be a mismatch and can create crisis in case the customer appears in 90 days to claim his or her deposit savings .This inadequacy affects housing industry like every rest and sectors of the Nigerian economy . Until now the major still remains access to cheap credit and when available could be accessed at a high cost of 20 to 30 percent .That is unsustainable compared to cheaper long term funds.With the new company ,some of these challenges as noted above can be finally put to rest or easily resolved .Though it may take new company few years for the new framework to have impact ,nevertheless a new dawn has just begun .
While manufacturing contributes 6.81 percent in the rebased GDP ,the telecom sector contributes a remarkable 8.53 percent in 2003 is projected to balloon to 15 percent by 2015 election year –some 95 percent from 2013 figure.According to national bureau of statistics-NBS,,it grew from 1.9 percent in 2006 to 7.05 percent in 2012 from one telecom operators with 300,000 lines to over 120 million phone subscribers in to the 3rd fastest growing telecom market worldwide . While the Agricultural sector is set to take over from Telecom or compete with it in term of wealth distribution presently contributes 21.97 percent to the rebased GDP about 112 billion dollars or 17.825 trillion naira compared to the non-rebased GDP of 93.7 billion dollars or 14.71 trillion naira in 2013 ,the real estate that ought to have by now taken over or somehow compete with Telecom or Agriculture as top government precedences say in five years period .It currently contributes 8.1 percent to the Nigerian economy or 6.4 trillion naira –about 40billion dollars of the rebased GDP .
With robust legal framework ,home ownership access and home ownership rate that presently hovers at 25 percent can be increased significantly and gradually as access widens to include every tom dick and harry and the provision of affordable housing and sustainable mortgages to move the Nigerian economy ahead .Real estate has the potential to compete with these sectors, generate with millions of jobs ,bridging the housing deficits and setting implementation framework for the eradication of slums especially urban slums in the country.
The contrasting figures bandied around by federal agencies about the housing deficits in the country devoid of reasonable consensus that reflects the actual shortfalls in the system has aggravated time tested planning and actual expenditures for affordable housing and sustainable development. Recent figures by National Bureau of Statistics-NBS put it between 12-14million residential units while the real estate experts still maintain the figures of 16 million units –a figure already disputed by factions or other practitioners in the same industry.
Be that as it may , with over 3.6million Nigerian workers registered under the scheme ,a meager portion of the over the over 50 million active working population in the country generating a billion naira monthly ,majority of Nigerians and even contributors still live in condemned slums and roaming houses .Stakeholders including civil servants have called for broadbased reform of the sector to avert the growing difficulties being experienced in accessing the public fund .Yet untamed ,they still try and push for transformation.
The mortgage sector operatives are bent on sectoral reforms in terms of comprehensive policy reform to integrate housing and housing finance sectors into the larger financial system and refines loan standard as well as its underwriting methods including national housing fund attractive to primary mortgage institutions –PMIs .
As part of the 15 page recommended reform memorandum submitted by mortgage banking association of Nigeria-MBAN to VISION20:2020 Secretariat of the National Planning Commission at the early period of the erstwhile CBN Governor Lamido Sanusi Lamido tenure ,expectations and optimism about the much vaunted reform went into full gear ,by taking action and calculated risk to move their nation ahead .The private sector proposal and such independent professional tips provided were aimed to jumpstart and fast track the reforms in the country .In this context ,the following actions were recommended on the MBAN documents.These include --:
- The creation of a framework for the mobilization of a private sector funding into the sector and also providing basic opportunities or incentives for pension and insurance fund companies to partner with PMIs for the evolution of market based financial products saddled with bias to serve as launching pad for secondary mortgage operations inducing reduction in transaction charges in the sector in view of high cost being borne by homebuyers and structuring of special administrative apparatuses to reduce what it takes to access governors consent for mortgage ;
- The approval of national building plans and estate developments in all 36 States as well as expeditious passage of pending housing and housing finance and related legislation presently before National Assembly into law ;
- The facilitation of the issuance of limited guarantee scheme by federal ministry of finance –a proposition similar to U.S. Home Loans Bank to basically provide liquidity to PMIs –primary mortgage institutions empowering them to undertake bigger bets and more mortgage oriented activities to attain much needed housing supply expansion made possible through introduction of favorable fiscal policy and other relevant incentives to attract private sector funding ;
- To encourage federal government to jumpstart an infrastructural driven initiative handled by the States opening up new areas and districts in various townships ,development oriented to expand housing stock;
- Partial privatizations of federal mortgage Bank of Nigeria –FMBN with clearly defined charter and target codified with a set of critical functions operating as second tier institution in the mortgage market ,enhancing efficiency and development activities as well as facilitation of a highly competitive and vibrant market among existing visionary players.
MBAN notes prudent public sector policy roles ,continuous and progressive subsidies and incentives in the management of short term transition issues and market wide reform challenges is critical to long term sustainable economic development of the public institutions, housing and housing finance systems in the country .It believes rising cost of building materials has stalled the provision of affordable housing and supply of affordable mortgageable homes .It also campaigns for measures to tackle this problem and to set up specialized intervention funds to provide much needed infrastructure for private developers as temporary relief as nation anticipates the development and maturity of the bond market to fund urban infrastructural needs.
It also suggests critical measures be taken to address exigencies and issues such as liquidity risk,high interest rate risk,inadequate funding sources , poor information flow, collateral systems, lack of credit risk management and human capacity problems and lack of standardized loan products to allow borrowing against mortgage assets, securitization or more .
Moreover ,the Managing Director of FBN Mortgages Ltd. and also Vice President of MBAN Muhamed Santuraki like his coleagues also urged the CBN Governor during the same period to embark on broad based reform and revamp operative mechanism of NHF system and the FMBN to avoid bottlenecks and made loans available to all and sundry.However with the ascendancy of the CBN Governor ……………a new vista was entirely opened for consolidation of the gains of the previous tenure .The emergence of the Nigerian Mortgage Refinance Corporation –NMRC – a public private sector participation corporation –PPP can be seen as an ideological reflection of some of the propositions and 15 recommendations of MBAN of the previous era.Its success alone in implementing the recommendations can go along way to resolve the industry inadequacies and sectoral hurdles .
Circumstances are quickly changing as policies, institution and legal systems mature. The new MBAN and NMRC President and also managing director of Homebase Mortgage bank-Mr Femi Johnson expressed optimism in the possible resolution of the predicaments facing sector and advocated a broad based framework as critical measures to resolve these challenges .In an interview with Daily Independent ,he also identified some of these teething problems such as lack of liquidity ,high cost of funds , ,lack of long term funds , lack of foreclosure rules ,poor legal system , lack of bonafide access to property titles and inadequate possession of property titles to mortgage creation and financing ,bureaucratic bottlenecks on land matters .Other practitioners also lamented lack of land availability and growing cost of building materials .Infact all 7 sectors in the construction and housing industry we re said to grossly affected by a host of wide ranging problems from materials , building to infrastructure among others in addition to mortgage provision cannot be treated in isolation.
With the launching of Nigerian Mortgage Refinance Corporation –NMRC, it is envisaged that more liquidity would be created to take the cash strapped industry to the next level .According to its corporate model ,NMRC as a PPP is a secondary mortgage company that will refinance mortgages being given out by PMIs or primary mortgage lenders and commercial banks operating mortgage business .NMRC in partnership with federal ministry of finance is set to create landmark 200,000 mortgages over the next five years funded initially by World Bank to the tune of $200 million-a sovereign fund out of which 50million will be used for the provision of micro housing finance for the benefit of the poorer classes not served by lower cadre informal sector lenders .
The main role of NMRC is not only to refinance loans from primary mortgage lenders but also to essentially to create a platform for long term finance currently not available in the finance sector by issuing and raising bonds in the capital market .This bond is guaranteed by federal government and backed up by people ‘s trust and confidence in the mortgage system and bond mechanism. Contrary to initial proposition its shareholding structure comprises of MBAN and mortgage Banks ,50 percent and 50 percent remaining taken up by other stakeholders including private investors and sovereign wealth funds taken up the balance.
It is set up to raise mortgage lending from its present moribund position of a meager 20,000 loans to over 200,000 mortgages in five years .This indicates holistically a housing at the rate of five million naira per unit ,about 1 trillion naira is to be injected into the system to create such type of mortgages and multiply mortgages or could be 2 trillion naira for houses of 10 million naira per unit.So ,World Bank roughly 50 million naira is a mere scratch on the surface on the surface giving the magnitude of funds at its disposal in the future or that is required to execute the gigantic mandate .
Frankly speaking , Federal government with its partnership with the States, for NMRC project implementation , almost all the recommendations of MBAN during the early period of the previous CBN regime is getting rich attention .The problem now is sustainability like previous policy regimes in the country .
It cannot be disputed construction plays a substantial role in the sustainable economic development of a nation irrespective of the existing levels of development and the available hurdles that must be surmounted to fulfill its goals of ethical control, professionalism and affordable housing for all –Ibikunle:2014;Zantandis and Tsiotras :1998].It generally employs between 2 to 10 percent of national workforce in most countries.Abdulrahman and Hassan ,2008].
However it remain debatable whether or not Nigeria had recorded an impressive economic growth over the last three decades .This evidenced by an increase in the rate of abandoned projects ,incessant building collapses and low quality In housing delivery ,professional incompetency and quackery ,bureaucratic bottlenecks , low level of local content in favour of the expatriate contractors and low level of finance options and sources and the rest of them .
Optimistically ,it could be a thing of history with the emergence of new mortgage company .It means mortgage Bankers can raise 10-20 years mortgage and then sell what they create up to the new mortgage company that will in turn issues long term bond affording to wait for the total loans to be paid out .Being able to access loan continually multiplies mortgages and would deepen the mortgage market through continuous and cheap access to fresh loans .Having access to longer term mortgages of 15 to 20 years directly by borrowers could easily be regarded as the best thing to have happened to the industry over the last 50 something years of nationhood and can be easily paid back than a medium term facility .With the additional 4 to 5 trillion naira pension funds if not still in deficit –an enabling environment is being created and could be a boon to the housing industry and economy in general if sustained and the new institution effectively run on the basis of economic expediencies.
Generally speaking,there are no long term funds in the Nigerian economy especially the banking industry and the available funds are short term funds of 90 days or maximum of a ear facility So trying to lend short term facility as long term fund could be a mismatch and can create crisis in case the customer appears in 90 days to claim his or her deposit savings .This inadequacy affects housing industry like every rest and sectors of the Nigerian economy . Until now the major still remains access to cheap credit and when available could be accessed at a high cost of 20 to 30 percent .That is unsustainable compared to cheaper long term funds.With the new company ,some of these challenges as noted above can be finally put to rest or easily resolved .Though it may take new company few years for the new framework to have impact ,nevertheless a new dawn has just begun .
While manufacturing contributes 6.81 percent in the rebased GDP ,the telecom sector contributes a remarkable 8.53 percent in 2003 is projected to balloon to 15 percent by 2015 election year –some 95 percent from 2013 figure.According to national bureau of statistics-NBS,,it grew from 1.9 percent in 2006 to 7.05 percent in 2012 from one telecom operators with 300,000 lines to over 120 million phone subscribers in to the 3rd fastest growing telecom market worldwide . While the Agricultural sector is set to take over from Telecom or compete with it in term of wealth distribution presently contributes 21.97 percent to the rebased GDP about 112 billion dollars or 17.825 trillion naira compared to the non-rebased GDP of 93.7 billion dollars or 14.71 trillion naira in 2013 ,the real estate that ought to have by now taken over or somehow compete with Telecom or Agriculture as top government precedences say in five years period .It currently contributes 8.1 percent to the Nigerian economy or 6.4 trillion naira –about 40billion dollars of the rebased GDP .
With robust legal framework ,home ownership access and home ownership rate that presently hovers at 25 percent can be increased significantly and gradually as access widens to include every tom dick and harry and the provision of affordable housing and sustainable mortgages to move the Nigerian economy ahead .Real estate has the potential to compete with these sectors, generate with millions of jobs ,bridging the housing deficits and setting implementation framework for the eradication of slums especially urban slums in the country.
THE NATIONAL HOUSING INDUSTRY AT A CROSSROADS -2
The contrasting figures bandied around by federal agencies about the housing deficits in the country devoid of reasonable consensus that reflects the actual shortfalls in the system has aggravated time tested planning and actual expenditures for affordable housing and sustainable development. Recent figures by National Bureau of Statistics-NBS put it between 12-14million residential units while the real estate experts still maintain the figures of 16 million units –a figure already disputed by factions or other practitioners in the same industry .
Be that as it may , with over 3.6million Nigerian workers registered under the scheme ,a meager portion of the over the over 50 million active working population in the country generating a billion naira monthly ,majority of Nigerians and even contributors still live in condemned slums and roaming houses .Stakeholders including civil servants have called for broadbased reform of the sector to avert the growing difficulties being experienced in accessing the public fund .Yet untamed ,they still try and push for transformation.
The mortgage sector operatives are bent on sectoral reforms in terms of comprehensive policy reform to integrate housing and housing finance sectors into the larger financial system and refines loan standard as well as its underwriting methods including national housing fund attractive to primary mortgage institutions –PMIs .
As part of the 15 page recommended reform memorandum submitted by mortgage banking association of Nigeria-MBAN to VISION20:2020 Secretariat of the National Planning Commission at the early period of the erstwhile CBN Governor Lamido Sanusi Lamido tenure ,expectations and optimism about the much vaunted reform went into full gear ,by taking action and calculated risk to move their nation ahead .The private sector proposal and such independent professional tips provided were aimed to jumstart and fast track the reforms in the country .In this context ,the following actions were recommended on the MBAN documents.These include --:
- The creation of a framework for the mobilization of a private sector funding into the sector and also providing basic opportunities or incentives for pension and insurance fund companies to partner with PMIs for the evolution of market based financial products saddled with bias to serve as launching pad for secondary mortgage operations inducing reduction in transaction charges in the sector in view of high cost being borne by homebuyers and structuring of special administrative apparatuses to reduce what it takes to access governors consent for mortgage ;
- The approval of national building plans and estate developments in all 36 States as well as expeditious passage of pending housing and housing finance and related legislation presently before National Assembly into law ;
- The facilitation of the issuance of limited guarantee scheme by federal ministry of finance –a proposition similar to U.S. Home Loans Bank to basically provide liquidity to PMIs –primary mortgage institutions empowering them to undertake bigger bets and more mortgage oriented activities to attain much needed housing supply expansion made possible through introduction of favorable fiscal policy and other relevant incentives to attract private sector funding ;
- To encourage federal government to jumpstart an infrastructural driven initiative handled by the States opening up new areas and districts in various townships ,development oriented to expand housing stock;
- Partial privatizations of federal mortgage Bank of Nigeria –FMBN with clearly defined charter and target codified with a set of critical functions operating as second tier institution in the mortgage market ,enhancing efficiency and development activities as well as facilitation of a highly competitive and vibrant market among existing visionary players.
MBAN notes prudent public sector policy roles ,continuous and progressive subsidies and incentives in the management of short term transition issues and market wide reform challenges is critical to long term sustainable economic development of the public institutions, housing and housing finance systems in the country .It believes rising cost of building materials has stalled the provision of affordable housing and supply of affordable mortgageable homes .It also campaigns for measures to tackle this problem and to set up specialized intervention funds to provide much needed infrastructure for private developers as temporary relief as nation anticipates the development and maturity of the bond market to fund urban infrastructural needs.
It also suggests critical measures be taken to address exigencies and issues such as liquidity risk,high interest rate risk,inadequate funding sources , poor information flow, collateral systems, lack of credit risk management and human capacity problems and lack of standardized loan products to allow borrowing against mortgage assets, securitization or more .
Moreover ,the Managing Director of FBN Mortgages Ltd. and also Vice President of MBAN Muhamed Santuraki like his coleagues also urged the CBN Governor during the same period to embark on broad based reform and revamp operative mechanism of NHF system and the FMBN to avoid bottlenecks and made loans available to all and sundry.However with the ascendancy of the CBN Governor ……………a new vista was entirely opened for consolidation of the gains of the previous tenure .The emergence of the Nigerian Mortgage Refinance Corporation –NMRC – a public private sector participation corporation –PPP can be seen as an ideological reflection of some of the propositions and 15 recommendations of MBAN of the previous era.Its success alone in implementing the recommendations can go along way to resolve the industry inadequacies and sectoral hurdles .
Circumstances are quickly changing as policies, institution and legal systems mature. The new MBAN and NMRC President and also managing director of Homebase Mortgage bank-Mr Femi Johnson expressed optimism in the possible resolution of the predicaments facing sector and advocated a broad based framework as critical measures to resolve these challenges .In an interview with Daily Independent ,he also identified some of these teething problems such as lack of liquidity ,high cost of funds , ,lack of long term funds , lack of foreclosure rules ,poor legal system , lack of bonafide access to property titles and inadequate possession of property titles to mortgage creation and financing ,bureaucratic bottlenecks on land matters .Other practitioners also lamented lack of land availability and growing cost of building materials .Infact all 7 sectors in the construction and housing industry we re said to grossly affected by a host of wide ranging problems from materials , building to infrastructure among others in addition to mortgage provision cannot be treated in isolation.
With the launching of Nigerian Mortgage Refinance Corporation –NMRC, it is envisaged that more liquidity would be created to take the cash strapped industry to the next level .According to its corporate model ,NMRC as a PPP is a secondary mortgage company that will refinance mortgages being given out by PMIs or primary mortgage lenders and commercial banks operating mortgage business .NMRC in partnership with federal ministry of finance is set to create landmark 200,000 mortgages over the next five years funded initially by World Bank to the tune of $200 million-a sovereign fund out of which 50million will be used for the provision of micro housing finance for the benefit of the poorer classes not served by lower cadre informal sector lenders .
The main role of NMRC is not only to refinance loans from primary mortgage lenders but also to essentially to create a platform for long term finance currently not available in the finance sector by issuing and raising bonds in the capital market .This bond is guaranteed by federal government and backed up by people ‘s trust and confidence in the mortgage system and bond mechanism. Contrary to initial proposition its shareholding structure comprises of MBAN and mortgage Banks ,50 percent and 50 percent remaining taken up by other stakeholders including private investors and sovereign wealth funds taken up the balance.
It is set up to raise mortgage lending from its present moribund position of a meager 20,000 loans to over 200,000 mortgages in five years .This indicates holistically a housing at the rate of five million naira per unit ,about 1 trillion naira is to be into the system to create such type of mortgages and multiply mortgages or could be 2 trillion naira for houses of 10 million naira per unit.So ,World Bank roughly 50 million naira is a mere scratch on the surface on the surface giving the magnitude of funds at its disposal in the future or that is required to execute the gigantic mandate .
Frankly speaking , Federal government with its partnership with the States, for NMRC project implementation , almost all the recommendations of MBAN during the early period of the previous CBN regime is getting rich attention .The problem now is sustainability like previous policy regimes in the country .
It cannot be disputed construction plays a substantial role in the sustainable economic development of a nation irrespective of the existing levels of development and the available hurdles that must be surmounted to fulfill its goals of ethical control, professionalism and affordable housing for all –Ibikunle:2014;Zantandis and Tsiotras :1998].It generally employs between 2 to 10 percent of national workforce in most countries.Abdulrahman and Hassan ,2008].
However it remain debatable whether or not Nigeria had recorded an impressive economic growth over the last three decades .This evidenced by an increase in the rate of abandoned projects ,incessant building collapses and low quality In housing delivery ,professional incompetency and quackery ,bureaucratic bottlenecks , low level of local content in favour of the expatriate contractors and low level of finance options and sources and the rest of them .
Optimistically ,it could be a thing of history with the emergence of new mortgage company .It means mortgage Bankers can raise 10-20 years mortgage and then sell what they create up to the new mortgage company that will in turn issues long term bond affording to wait for the total loans to be paid out .Being able to access loan continually multiplies mortgages and would deepen the mortgage market through continuous and cheap access to fresh loans .Having access to longer term mortgages of 15 to 20 years directly by borrowers could easily be regarded as the best thing to have happened to the industry over the last 50 something years of nationhood and can be easily paid back than a medium term facility .With the additional 4 to 5 trillion naira pension funds if not still in deficit –an enabling environment is being created and could be a boon to the housing industry and economy in general if sustained and the new institution effectively run on the basis of economic expediencies.
Generally speaking,there are no long term funds in the Nigerian economy especially the banking industry and the available funds are short term funds of 90 days or maximum of a ear facility So trying to lend short term facility as long term fund could be a mismatch and can create crisis in case the customer appears in 90 days to claim his or her deposit savings .This inadequacy affects housing industry like every rest and sectors of the Nigerian economy . Until now the major still remains access to cheap credit and when available could be accessed at a high cost of 20 to 30 percent .That is unsustainable compared to cheaper long term funds.With the new company ,some of these challenges as noted above can be finally put to rest or easily resolved .Though it may take new company few years for the new framework to have impact ,nevertheless a new dawn has just begun .
While manufacturing contributes 6.81 percent in the rebased GDP ,the telecom sector contributes a remarkable 8.53 percent in 2003 is projected to balloon to 15 percent by 2015 election year –some 95 percent from 2013 figure.According to national bureau of statistics-NBS,,it grew from 1.9 percent in 2006 to 7.05 percent in 2012 from one telecom operators with 300,000 lines to over 120 million phone subscribers in to the 3rd fastest growing telecom market worldwide . While the Agricultural sector is set to take over from Telecom or compete with it in term of wealth distribution presently contributes 21.97 percent to the rebased GDP about 112 billion dollars or 17.825 trillion naira compared to the non-rebased GDP of 93.7 billion dollars or 14.71 trillion naira in 2013 ,the real estate that ought to have by now taken over or somehow compete with Telecom or Agriculture as top government precedences say in five years period .It currently contributes 8.1 percent to the Nigerian economy or 6.4 trillion naira –about 40billion dollars of the rebased GDP .
With robust legal framework ,home ownership access and home ownership rate that presently hovers at 25 percent can be increased significantly and gradually as access widens to include every tom dick and harry and the provision of affordable housing and sustainable mortgages to move the Nigerian economy ahead .Real estate has the potential to compete with these sectors, generate with millions of jobs ,bridging the housing deficits and setting implementation framework for the eradication of slums especially urban slums in the country.
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