CHALLENGES FACING INFRASTRUCTURAL DEVELOPMENT IN NIGERIA-PART ONE

                                   

 Infrastructure in general is the backbone of the economy but  much more man that is a sustainable indicator of a growing economy and its lagging behind cannot be detached from the prism of a poor planned economy .By and large ,since development is a binding factor for all homosapiens ,indeed,the true binding factor of  existence is also the breath of mankind  and the nature of existence respectively   .In this incendiary piece this author  gave perspectives in the most suistable manner and environment and our battle  to live on  to mark diseases. .


First and foremost ,the state of infrastructure  in any clime is a major catalyst for capacity building ,sustainable capacity building ,economic development and sustainable economic development respectively .Obviously  ,it cannot be disputed that  infrastructure plays an extremely  important role in nation building and the practice of development cannot be easily detached from the realm of long term  infrastructural development .It is also a symbolic evidence and a signatory to the level of development in an economy as well as a sole indicator of the development velocity mass at a particular period . Development can be measured by its robustness , quantity and quality especially in the provision of social services as may be desired by the state at a given period.This indicates thoroughly that to raise the level of development velocity and the practice of development including  development regime respectively in an economy of a nation  is to optimally maximizes the proportion of sustainable growth  via infrastructural development at a particular period.Infact ,the mechanization of industrial system,industrialization and the so called evolution of modern information technology age  cannot be possible without its welfare and providence .It is therefore a principal agent and apex gauge of  national development and modern civilisation.

The World Bank -1994 ]like Kindle Berger in his book ‘Economic Development ‘ defines infrastructure  as ‘Social Overhead Capital ‘ providing services and public amenities as public goods such as telecom ,solid waste disposal services  ,electricity ,water supply  ,Sanitation,sewage   and a host of such public goods .It can also b e regarded as public works such as drainage ,Roads , canals and major Dam works with utility channeled to irrigation and transport facilities  including  urban and inter-urban services  movements ,Airports ,rails and waterways .It is therefore the structural linkage between the arts and practice,developing system and developed system, leadership and followership, urban and rural ,government and the people-governed  and the evidence of  political boons and democracy  dividends –a consensus signatory to development and as a development barometer is invariably  a custodian of social contract and cultural contract respectively between the state and the nation ,nationalities and customs ,demographics and moral exigencies of the state.

Understanding the nature of development system and timely needed development regimes including demographical dispersal and velocity distribution and the strategic impact of widespread circulation of its mutual benefits to both the state and the nation can insulates a nation against social instability .Infact the longevity of the state rests largely on the insurable welfare of this  state of infrastructure adequacy  .Mass investment in infrastructural development closes the gap between government and the people,the governance and the governed .As incentives for capacity building and nation building ,physical infrastructural development has taken a life of his own growing at alarming rate with the advent of modern civilization. Nations that have thrived and enjoyed landmark economic expansion  and accelerates economic growth have had massive influences and  opportunity to be tied  to its apron string as the main catalyst of better standard of living in the international community.The applications of modern technological driven infrastructure tends to produce widespread economic relief and competitive development regimes.

Infrastructure provides a framework for the participation of the people ,demographics and for acceleration of faster  growth in output ,reduces cost of production ,institutional dysnfunctioning ,promotes development , national competitiveness and higher productivity .By increasing the quality of growth and the quality and quantity of outputs ,the gains of higher productivity is transformed into higher competitiveness.This enables competitive growth creating enabling environment for economic agents   and workforce in its surrounding condition .Access to free information disclosure can enhance and optimise its impact on a nation’s external terms of trade .

The objectives of the paper is to lay more emphasis on the role of infrastructure in economic development.Industrialisation as requited by Sanusi-2012] means ;’the totality of relations involving workers ,employers  and the society as they develop to make up  the new machines ,process of building up a nation’s capacity  to connect raw materials and  other inputs into finished goods  and manufactured goods for other production or for final consumption –Anyanwu,et al.,1997].While the United States committee on planning -1974] sees it as not only a means of producing wider variety of products by the application of  modern technology , with the strategic intent and ultimate means of revamping the condition of work and  standard of living of the poverty stricken people of the world .Ibikunle-2012 sees it as the standard definition of industrialization and a radical means of transformation process and transformation management process respectively facilitated and accelerated by the inviolable commerce of cumulative information production  for the purpose of exchange and distribution of tangible and intangible discharge and production  of goods and services It is the middle stage and middle passage of modern civilization and ultimate alibi of standard growth of required standard of living of the citizenry  and development velocity mass as needed to safeguard the task of nation building  .With this platform industrialization distributes and redistributes national income ,potentially banish inequality of wealth and reduces mass poverty  based on the significance and sustainable leverage of the productive sector creating enabling environment for the creation of mass employment and poverty free economy  depending on available macroeconomic strategy at a time.

Industrialization promotes rapid economic development in an economy in which better infrastructure is put in place and infrastructural development can also be seen as an integral part of industrialization process or at best regarded as base metal of industrialization .In terms of its role in infrastructural development  industrialization process economic surplus that further stimulates economic development and therefore as symbolically accelerates faster  growth in output  and diversification function of that output .This could lead to structural change conducive to sustainable income distribution and economic growth.UNIDO;1993],Sanusi:2012].The diversification  functions  also stimulates higher productivity ,better competitiveness ,efficiency and inducing growth for further diversification  of exports ,multiplying capability effect and value added incentives to sustainable revamp the process of the nation’s terms of trade and strengthens development pattern and velocity of a nation .

The development of  several studies  in the classical literature  and academic development discourse that opine that industrialization brings about  social equality should be debunked not just with a wave of hand but its thematic ambiguity expelled with its undebatable  misrepresentation of convoluted facts .The same with infrastructural development .Rather what it does is to set the pace for the mobilization of social equality using its revolutionary platform as vehicle of social transformation ,promotes higher level of social stability , mass employment and more equitable distribution of disposable income setting the pace for social equality and closes the gap between the rich and the poor ,haves and haves not .This invariably provides the society with the tool to get the there or get the work done .The management of the economy at large  and the predisposition of governance institutions available at the helms of leadership and followership  regimes provides the avenue for the mobilization of raw materials and production of finished goods .Its most important benchmark as evidence of structural change is the alteration or change in the nature of physical ,material ,economic ,human and natural resources  previously deployed in comparison to altered environment .

Anyanwu et al -1997 ]unveiled the significance of industrialization and its multiplier effect on finished goods or intermediate goods .Output expansion  and mass employment reflects diversification of wealth ,boosts human capital and manpower development and generate foreign exchange to the fullest of natural resources potential of the State . This cannot be possible according to Oshikoya  et al.2012] without that critical mass .Obviously it is a causal factor for growth drivers and also a pivotal stalk of  growth sustainability and competitiveness of such growth .Sanusi:2012] also commended it” plays the role of both consumption goods and input into the production process of nearly  every sector “.

It further noted “As a driving factor of economic growth ,there is a strong correlation between the growth of GDP   and economic infrastructure  which tends to work both ways .Growth of infrastructure  can result from the demand  of other sectors e.g.industry that needs ports ,roads and power  supplies to function well”The availability of such facilities tends to stimulate investment for exponential economic growth promoting value added productive and competitive and barrier breaking sustainable economic development .

Infrastructure provides incentives that reduces cost, buoy mass productivity and enhances price competitiveness .It also unleashes unusual growth in  investment , savings ,consumption and increases the investment rate of marginal projects  and allied divestiture by economic agents  who now exploit diverse ranges  to invest in a non-inflationary environment .Consequently growth velocity increases and as a determinant of price and non-price competitiveness in the international markets also enhances  competitiveness among various factors of production mobilisable for every round economic growth .It also improves price and non-price competitiveness as intermediate input  in both low cost ,high and marginal form of infrastructure service.

It accelerates trade in foreign market ,boosting timely and safe delivery of goods and services  and adequately promote free flow of technical information  needed for such trade justifying its essence also as a determinant of non-price competitiveness .As market capacity is governed by a given proportion of development ,so also is the level  of  the capital flows public and private is also determined by the level of convenience entrenched  in the existing infrastructure as an enabling environment  for long run economic growth .In some economies it is faster to recoup mass investment made in infrastructure say telecom  for instance .Whereas in some other countries it can be tedious venture but still in the long run infrastructure risk-reward pay off is often a boon to the economy .

    AFRICAN INFRASTRUCTURAL  DEVLOPMENT  CHALLENGES :HISTORICAL PROFILE

Generally speaking the state of infrastructure in Africa is deplorable begging for urgent attention  by policy makers, bureaucrats and politician alike  and parlous in outlook in general .

Although over the last few years Africa has benefitted immensely from some gigantic improvements  in infrastructure .A monumental jump  of over 50 percent  of AFRICANS  who lived with one form of GSM signal in 2006 had redefined the pattern of economic growth on the dark continent .Five African countries and twelve others have either met millennium development targets for universal water access or are on track to achieve same,huge development space still begs for massive attention

Electricity ,motor able roads ,workable rail ,water facilities and a host of other facilities  and  basic amenities are in short supply in the economies under survey .A basket of prepaid mobile phone services  on a monthly basis costs 12 dollars compared to only 2 dollars  in south Asia ;Africans pay twice   as much for basic services like elsewhere around the world   ;more than 20 percent of African population spreading from Ghana , Cameroun, Mauritania Niger ,Tanzania and Mauritania to access basic or primary water supply must travel two kilometers’ and only one out of three Africans in the rural areas have access to  all-season roads  compared to 80 percent of Africa ‘s main road network under good attention …

Sanusi-2011 notes that Africa accounts for 20 percent of global telecom lines  and that there are more telephone lines in Brazil than  the whole of AFRICA. This shortfall nevertheless is  still an improvement than what we had in 2001 when telephone lines in New York alone exceeded the whole of Africa .Nigeria’s teledensity now is 70:100 compared to 0.6 percent  in 2001 when the revolution started.The provision of basic amenities was skewed in favour of the urban areas whereas 80 percent of  Nigerians  live in  blackout with no electricity ,no light.source:ADB/CBN :2003 .The  repairable stage of existing facilities and vandalisation menace ,diversion of funds for capital projects ,maintenance of overbureacreaucy  and construction of new facilitites has led to perennial economic decline ,sabotage of growth ,low productivity  and growing deindustrialization in which the industrial  production and capacity utilization  perpetually declines wobbling tirelessly without lasting resolve .For instance according to CBN annual report  and statement of accounts ,variouis issssues , and index of major industrialization nosedived from 162.9 percent  in 1990 to 131.8 percent in 1998 .Also  in another study the capacity utilization eroded from capacity utilization rose from  73.3 percent  in 1981 to 32.4 percent  in 1998 and 55 percent respectively  in 2009.

There can  be no substitute  for infrastructure and industrial development flag  especially its strategic importance in the distribution  of national income and wealth .-a giant missing link to developing countries .Its capacity is predominantly oriented to close the gap between the rich and poor nations in the international community should not be overemphasized .Barrier to capacity building effectively declines through infrastructural development and its impact on sustainable economic development.Consequently industrial development stimulates leverage on existing infrastructure to boost wealth creation and maximum  growth in capacity of the economy at large .

The case of gross under capacity utilization and idle human capacity is symbolic with low index of industrial production  and the inability of the state to put idle capital and labour into production .As long as idle labour exists ,it can be very difficult to stimulate infrastructural development in a low skilled environment which may not necessarily entails putting idle labour into productive use .In other words ,infrastructural development  and human capacity building must be stimulated alongside each other for the enterprise of  human and capacity building via sustainable infrastructural development to reap the reward  and gain of long term  industrial development. Human resources are either clogs  or tools to manage  these machines which when successfully impugned to signify  sectoral decline has been noted as paramount key of industrialization.

Anyanwu et al :1997 ] places more emphasis on the role of infrastructural development vis-a-vis  its strategic impact on economic development .This includes the provision of a channel  for the transformation  of raw materials  into finished goods  .This boosts  mass employment ,grows culture ,diversify the economic base and helps balloons the forex base revenues ,optimize use of raw materials ,reduce external debt burden  dependence and grow local capacity building .

However the concept of infrastructure is a bit  broad based and especially the categorization of infrastructural types ensures the use of optimal analysis for purpose of clarity .The complex competition that infrastructure provides in the stimulation of industrial development for the purpose of economic development  cannot be overemphasized ,thereby motivation the role of infrastructure in nation building .

In fra structure can be divided into public or conventional physical infrastructure  as referred earlier to - by Harvard professor Jeffrey Sachs .Besides we have  anew form of human infrastructure or perhaps the oldest or youngest form ever since they  were deployed in the mill of labor In developing nation’s labour market of course labor is cheap ,less priced and especially the exploitation of brain drain – a plague to developing nation and a brain gain to advanced has reached the neplus ulstra never seen before in history .Though the physical infrastructure is prominent without with industrialization and a modern standard of living cannot be possible ,there is also financial infrastructure that lubricates the financial sector and  economy at large  .

Energy access is critical to African economic growth and poverty reduction .It is the bedrock of modern civilization .Access to abundant energy supplies often in favor of Africa can promote the rebirth of African economies and renaissance of black civilization . About 30 African countries today are been plagued by monumental energy crisis ;while only one in four Africans can boast of sustainable access to electricity .The total electricity generation output of the 48 sub-Saharan Africa countries put at 68 gigawats is still less than that of Spain .Power constraint according to the corporate sector is still the leading nightmare and apart from South Africa power consumption is barely a percent 1% of the high income countries.

                                               THE STATE OF INFRASTRUCTURE IN NIGERIA

Mordern infrastructure  development  started way back  in the colonial era  marred with a long winding road of unsteady and uneven development .The main exclusive role of the British colonial masters was to intergrate the national boundaries into external trade through the provision of transport infrasport.This facilitated mass invesmnet in rail,roads ,port  meant to evacuate domestic products from the hinterland to link them to local agricultural produce to foreign market  and ensure in exchange the safe delivery of imported manufactured goods.The total  road network by 1950 stood at 4,400km  while the rail network stood at 3,505km narrow gauge track was completed in 1930 and linked lagoa to kano , and then Port Harcourt ..CBN,2003].The size of domestic trade provides stimulus  for low road network expansion of the period .

THE EVOLUTION OF MICROFINANCE AND GLOBAL PRACTICES

EVOLUTION OF MICROFINANCE AND GLOBAL PRACTICES 1
It is unusually observed that the concept of microfinance today is the world fastest growing market technology and the most effective economic model ever contrived by man. It is more appropriate to poverty stricken climes and redistributionist societies offering reliable salvation dividends complete with robust financial innovation required to empower extremely impoverished people of the world .It is basically maneuvered not only for grass root empowerment but also for development of sustainable income generating projects thereby uplifting the living standard of the abject citizenry .And in many cases so to say help the poor build wealth and exit poverty . According to Grameen [1966] ‘it is the right of the poor.
Initially the objective of the study was to target the industry in its pristine form and make comprehensive analysis in comparison to global practices. However it was found out that a growing body of relevant researches and existing literature abound which are hereby reviewed in this piece in a vigorous analysis resting the earlier resolve .The paper is divided into 4 sections After the introduction or the background the concept of microfinance falls under sections 11 .Section 111 discusses or takes a cursory look and analysis of the top leading global institutions in the industry. And section 1V concludes and touches or exhumes the local environment in Nigeria and its challenges and untapped potentials. However these sections are spread into several chapters for convenient and elaborate readership
2.0 THE CONCEPT OF MICROFINANCE
Microfinance is the provision of financial services to the poor the unbankable and the low income households without access to formal financial institutions[Conroy ,2003] Besides being banking to the poor its progammes are broad based which make loans accessible to the poor and savings mobilization are endorsed especially for advanced [MFIs] in addition to other financial services are provided to micro enterprises and SMEs needy businesses
Nevertheless of all the sectors of microfinance micro credit is a foremost element and a leading component in the industry opening up the economy of the underprivileged and a new lease of life for the marginalized communities and economically active poor.
2.1 MICROCREDIT
According to Wikipedia micro credit specifically refers to small loans to the unemployed to poor entrepreneurs and to those living in poverty who are considered unbankable .It is a unit of microfinance which is the provision of a broader range of financial services to the poor It is also the extension of informal credit to the micro entrepreneurs. This helps them engage in productive venture .It has been touted as the last panacea for poverty alleviation in some countries .It succeeded immensely being a largely driven private sector initiative and avoided being extremely politicized and consequently has also outperformed all forms of development lending [Abolo,2001]
Given the unwillingness of the formal financial institutions and the poor innovation of the sector which tends to be reluctant to micro enterprises citing too much transaction costs associated with micro loans processing or the unreliability of MSMEs dubbed as high risk .A new market for micro credit was developed where the risk of default processing and other administrative expenses for business start up are manageable
Micro lending is a more effective complementary means to financial intermediation and a viable alternative to traditional practice of economic development .It empowers both individual and community for sustainable growth and development.
Its sets of principles are different from general financing or credit such as employment generation trust building micro entrepreneurial capacity building micro entrepreneurial initiative development socialist development lending and a strategic tool for socioeconomic development .Micro lending empowers the individual which has a multiplier effect as they contribute economically to the development of the communities they live over the long haul .It is also a saving grace to the lab our market as formal sector large sized companies ‘ decline .
THE IMPORTANCE OF WOMEN AND GLOBAL ECONOMY
Women have been vital resource a predominant focus and increasing priority of micro credit institutions and agencies worldwide. Women loans are repayment proof nearly freed of default and more beneficial to the family than loans to men and have more socioeconomic impact while bridging gender inequality gap. They are a good credit risk asset managing credit more efficiently invest income towards family welfare .They also benefit higher social status as they develop capacity to provide increasing sources of family income .Experience has also shown that of the 1. 2billion poor people worldwide women are in the majority and are responsible for the upbringing of tomorrow ‘s children .The consequence is that the poverty of women usually affects more humanity than it seems figuratively which leads to physical and social underdevelopment of their children laying foundation in stark negligence for tomorrow’s mass poverty .
An increasing number of Microfinance institutions [MFIs] are beginning to focus on women borrowers – truly the world worst poor people .SKS microfinance Promujer Nemaste Direct LAPO in Nigeria and the Grameen Foundation among others currently emphasize on the predominance of women in the socioeconomic arena and informal sector market economy.
FEATURES OF MICROCREDIT
1. Those that lack collateral
2. Individuals with no steady employment
3. Lack of client verifiable credit history
4. Extension of micro loans and clients are unbankables.
5.Encourage grass root empowerment
6.Execute self employment projects and boost micro entrepreneurial development.
7. The target is largely the informal sector.
THE ORIGIN AND TRADITON OF MICROCREDIT
According to Wikipedia micro credit as a financial innovation originated from Bangladesh where it has succeeded in liberating the extremely impoverished local peoples mainly the unbankables enabling them exit poverty and build wealth and generate capital through self empowerment and sustainable income generating projects .Its success today has largely encouraged the adoption of micro credit technology into mainstream banking and attempt was made to reclassify this league [unbankables] for the very first time as pre bankable.
With this reclassification it is increasingly gaining ground and credibility in the mainstream finance industry and various micro credit projects were contemplated by large finance organization as reliable source of future growth .When it was begun by ACCION and GRAMEEN in its modern incarnation in the mid-70s as a pilot projects only a very few gave it a chance of survival let alone its nascent or burgeoning global institutional appeal .It is the industry of now and the future the next big thing the last hope of the underprivileged and the ideology of market communalism.-the building block to Marxist homeland.
With the scathing remarks of the 1970s hardly dying away humanity had entered a new dawn and eventual potential relief for the less privileged was found as the industry evolved . The concept of micro credit can be traced back to portions of Marshall plan in the immediate post world war 11 the middle of 20th century .Some sources also link it back to the mid-1800s and the writings of abolitionist/legal theorist LYSANDER SPOONER who was a crusader of the benefits of numerous micro loans to the poor for entrepreneurial activities as a way to alleviate
Poverty .The New York Providence Fund is another tested historical source. All put together are launching pad to the incarnation and burst of the post -70s .
THE ANCIENT CONCEPT AND MORDERN RENAISANCE
There are historical differences between the ancient and modern concept of micro credit as expatiated .But the origin of the ancient started in Egypt where the ancients had found a means of buying now and paying later [creditisation]and the Egyptian equivalent of the term ‘charge it ‘came into being .When the Greeks came along a bit later with their belief in the worth of an individual citizen freeman became an exalted thing . That someone can be trusted in all aspects of life even commercial transactions influenced credit economy and the use of micro credit began to spread .The Romans came later and were only their followers established procedures for this budding market Which evolved as micro loans setting penalties for default or failure to pay .
Therefore this indicate that socialist lending began before capitalist lending and a proof that the ancients started micro credit and the entire credit market and provided a means of recording transactions laying down laws and establish man ‘s right to go into debt using the laws to regulate debtor[poor] – creditor [MFIs] relationship. Although it persisted through the millennia but the practice was heavily resisted due to its inadequate perusal as an incentive for egalitarian market economic building until fairly recent times. By the turn of 20th century when lending was well developed transcendent growth in science and modern theories beginning from LYSANDER’S among others it regained Pre eminence .though at a very slow pace until the 1970s of the YUNUS and ACCION
The industrial revolution [1770-1914] could not have been possible without micro credit and the evolution of the works of cottage factories during the period s such as the pin manufacturing shops noted by Adam Smith-[the exponent of laissez faire and classical economics ] could not have been possible without it and a contributory factor to Anglo Saxon or Germanic civilization .
SMES DEVELOPMENT INITIATIVE AND INDUSTRIAL REVOLUTION

Professor Alexander Geshenkron in a comparative study conducted ‘Economic Backwardness In Historical Perspective ; A Book Of Essays [1962] England ‘ . He noted the success of industrial revolution in England rested largely on the success of SMEs which require little capital to operate in addition to founder’s specialized entrepreneurship . As an economy categorized as moderately developing Germany also flourished during the period through them
And depended heavily on the Banking sector for their success . Likewise the quantum leap by Japanese economy during the similar period presented a more remarkable picture of the power of these wealth machines to support her phenomenal development prior to World war 11 .The secret behind this economic miracle according to Professor Yamamuva was simply cultivated by phenomenal growth in commercial lending to micro enterprises .This was made possible through the great Zaibatsu – an equivalent of modern development banking model . Today the world sole super power the United States followed similar universal pattern of mass development For instance Banks in Louisiana were noted to have relied heavily on SMEs as engine of growth and so heavily financed them for purposes of economic welfare of the Nation ‘s citizens It is the same logic everywhere .The developing countries also after independence have pursued and implemented similar policies to no avail .owing to socio psychological self imposed barriers

THE ADVENTURE OF MULTIDIMENTIONAL MICROFINANCE

With the emergence of roaring 70s pragmatic microfinance has come to stay much touted as the last panacea in the eradication of mass poverty and empowerment of the poor around the world .Beginning with micro credit or micro lending has come to include a broader range of value - added services [ credit savings micro insurance micro housing micro leasing etc] Originally according to Enugu Forum [ 2006] it is based on traditional forms of community financing amalgamating ideals of traditional finance and development assistance – a sort of socialist lending has grown to become a household name in the territories of Africa Latin America and Asia The microfinance movement evolved in the early 1980s.and Bangladesh and Bolivia were noted as major protagonists at the forefront of the movement which has gained increasing patronage over the last 20 years from multilateral agencies [ donor ] international financial institutions [IF Is] and commercial bankers flocking to the business.
THE ROLE OF MICRO INSURANCE AND SUSTAINABLE CAPACITY BUILDING
Getting down to the brass tacks it is to be noted that the long standing boom in the industry cannot be possible without micro insurance It is the lynchpin of successful micro credit projects oriented towards the sustainability of this venture especially undertaken in a sensitive and responsive economy .Simply put micro insurance is the provision of grass root insurance services as a basic strategic tool to securitize the micro and small businesses from alarming corporate mortality in an economy According to experts its services provide a lasting solution against unpremeditated mortality common among MSMEs especially those trading with microfinance credits .
Evidence of checkered antecedence abound in the nation’s history in which concerted efforts were made by successive administrations in the empowerment of the people through various micro credit projects and several poverty alleviation progammes Although each of this scheme Started well initially but fizzle out along the line closing shops while the target masses returned to their former poor state Their essence was to serve these unbankables and marginalized MSMEs .Insurance experts have noted that the schemes did die a natural death due to lack of insurance .Consequently could not provide a lasting solution to intended suffering masses .BETTER LIFE FOR WOMEN INITIATIVE and NAPEP were prominent samples .This ignorance has ravaged the country for along time both public and private sector have wasted millions of lives that could have been saved .
With the incursion of microfinance banks [MF Bs] the problem has persisted haunting ignorant depositors patronizing their services where unsecured micro credit is the order of the day .Educating the masses on the method to insure their deposits seem not to be their immediate priority .The policy makers and industry operators perhaps are ignorant of the implication and increasing corporate mortality in the country .The schemes practitioners are only interested in putting down a condition for accessing funds that are at best not truly insured failing to save the future of the funds .
FAILURE OF INSURANCE PRACTITIONERS TO CREATE MASS AWARENESS
Insurance businesses in the country are basically metropolitan based and hardly any awareness being created in the countryside .As the formal sector insurance industry potential businesses and market decline the level of awareness has refused to grow .Those who care about grass root limit their attempts to life products which is usually comprised of long gestation period not attractive and affordable to the peasants with no surplus funds to throw round or at best concentrated on third party motor insurance .They believed the grass root poor or common man has no muscle to flex around or pay much premium in comparison to former market size (Nwoji, 2008). Hardly a few concentrated efforts on grass root penetration even though they claim to do so .This is vital because the poor need insurance more than the privileged considering the over 148million un served potential market .in the country .
According to experts micro insurance is the solution to the failure of micro and small businesses especially those with micro credit from MFIs It ensures sustainable capacity building both for the institution [supplier] and the target audience in the long run .In Nigeria today more than 90 percent do not have any form of insurance Hence it offers a reliable medium to address this huge gap and deplorable cultural barrier that separates the nation from development market .Daniel[2009] also concluded it is characterized by low premium low coverage limits and sold as typical risk pooling and marketing arrangement are usually designed for low income people concentrating on marginalized grass root businesses not served by mainstream typical social or commercial insurance companies
Ojinaka [2009] argues that it is more profitable than all industrial risks put together. It is very cheap pose fewer problems than the traditional insurance in addition to the fact that the poor cannot instigate claims. To avoid failure of micro insurance projects it suggests group bonding based on societies bodies unions and associations as precondition for success .This distribution channels will be prime movers compounded with appropriate regulation monitoring and enforcement. Its sustainability would translate into sustainability of micro credit projects in the long run preserving capacity building .
OPERATIONAL STRATEGY PACKAGING AND MARKETING ARRANGEMENT
Micro insurance follows simple marketing arrangement For every micro credit project to be undertaken it should be attached .For instance where money is given to a borrower for a motor cycle or a sowing machine insurance package could be included using the distribution channels. It is a form of security and not a luxury the study noted .The road to sustainable economic growth can be harnessed through this practice liberating our people from mass poverty and sustain wealth creation capacity. The strategy will take care of mass market the petty traders farmers SMES and not saturated top market
Few companies that have tested the virgin market can testify to its growing appeal and profitability. In 2009 the Group managing director of Mutual Assurance Akin Akinbiyi affirmed this potential That his company main product was micro insurance He concluded that with total income of 1.3billion naira coming from the sector in 2008 alone covering policies worth 100,000 naira and per capital premium payment stood at100 naira .While it also paid over 300 million naira during the period as brokerage fees and commission on businesses in the sector .It is a promising experience that refocused the business as he pledged never to run after government account again.
Not only will it grow the economy it will also potentially combat crime violence theft and prevents slums through development finance insurance .It can also prevent frequency of losses
boost competitiveness and life expectancy bridge gender inequality protecting education employment generation sanitation influenced population control and parade intimidating corporate profitability as in the case cited above .Unfortunately Nigeria is a non starter in the business compare to other advanced countries of Europe and Asia .The role of micro insurance is to build capacity nurture sustainable social development maneuvered to eradicate mass poverty transforming the dividends of successful micro credit project into dividends of our nascent democracy .
HUGE MARKET POTENTIAL
In Nigeria today our communities are lying dormant being heavily humiliated and annexed by mass poverty .Thousands of micro insurance companies will be needed .For instance in Sierra Leone about 15 insurance companies are currently operating .Whereas Ijebu Ode Local Government in Ogun State has none presently which is the same size by population density as the 3million people in sierra Leone if not more .Not to talk of Alimosho local government formerly the largest local government in Africa before it was broken off into 6 local development Authorities Many countries on its own Even after the split the Ikotun -Igando LCDA alone is roughly the same size as Singapore and bigger than Equatorial Guinea Mauritius Sao Tome put together and some states in the federation We are yet to see one single insurance company located there ,let alone a micro starter .The market potential is as huge as the market ignorance
OTHER SUBDIVISIONS AND NEW INSTITUTIONS IN THE MARKET
Besides micro credit trade and micro insurance other sectors in the market include micro housing micro leasing Micro health micro industry micro leisure micro banking and development finance a new innovation of Development Finance Group [DIG] .All this can be noted in the advanced microfinance market [ AMM]of Asia etc.
With the new microfinance technology recently advanced by Microfinance Africa [MIFA] undoubtedly the world first potential microfinance rating bureau specifically focusing on highly untapped African market The entire world microfinance market had been reclassified as Advanced Grey Market [AGMMs] They are advanced but certainly a grey market .Given the magnitude or enormity of mass poverty bedeviling the territories of Asia andLatinAmerica .Excluding the OECD Club the rest of the world are classified as Blockbuster Grey Market [BGMMs] .That is un developed microfinance market of the world . Even in the advanced market some 10 percent poverty levels were found in the 90s [also AGMMs].The grey market of Africa Middle East parts of Asia and Latin America is highly extreme and a blockbuster in that regard .We know the strategic benchmark is usually mass poverty ravaging more than 80 percent of world population should we use UNDP Poverty profile as calibration and not World Bank ineffective poverty line concept
The entire formal market size institutions and models can easily be reclassified repackaged and imbibed into lower cadre microfinance market where suitable to enable the market diversify risk spread and serve the complex needs of the economically active poor while keeping undiluted the ideals of structural microfinance . .This is naturally expedient thing to do and must be fully adhered. Given the fact that the size of the existing market institutions at a given period determines the adequacy proportion of development capacity and sustainable practice vital to harness sustainable mass poverty relief and possibly eradicating the menace especially where microfinance neokeynesian [MNKs] ethics are imbibed by state political will
This needs a good development planning .Many Institutions can be nurtured such as micro- finance hedge funds[MHFs/MIHEFs] microfinance investment banks[MIBs] and houses[MFHs] microfinance discount houses[MIDIHOs/MDHs] micro venture capital [MVCs] community sovereign wealth funds[COSOWEFs] private wealth fund [PWFs] micro asset managers [MAMs] micro mutual fund [MMFs] private equity microfinance corporation/shops [PEMS] and micro investment security institutions[MISIs] and a host of others have been advanced by [MIFA]as a means to spread wealth .This is more suitable for territories with large informal sector which often constitutes 70-80 percent of the economy A nation can then have dual financial system adding the micro financial system to serve the huge informal market albeit better with grass root oriented laissez fairer regulations and micro prudential standard that are affordable to the microfinancial markets Most informal sectors if not all are heavily un served and similarly underserved even with the effort of informal institutions tirelessly providing inefficient services .The above institutions would serve in the micro financial credit markets .
According to [MIFA] in Nigeria alone they are to cut across the nation’s entire 97,000 economically passive communities .With a good political backing the nation can create wealth worth more than the U.S current G.D.P[15trillion dollars/2009 prices] prior to the maturity of Vision2020 and poverty can be eradicated in a decade or even less –It is an effective model one to tame the evils of inflation that the Keynesians and the monetarists and the entire macroeconomists have struggled in vain after over the last 30 years or more .But we seem not to believe our intellectual power desecrated in favor of western models [i.e. outdated neoliberalism] that could not spread wealth to the impoverished nations and the potential of our population market[POM] which is the major criteria in this micro-metric redistributionist dual financial model .
Should China adopt this dual micro financial model how much wealthier will she be in terms of GAPco-efficients [not GDP] and then making efficient GDP size in the long run since it has a very large poverty market and population market respectively. Nigeria can even be far richer than she does in this regard if we consider the untapped wealth of her natural wealth the POM size and making money from the export of this service to the rest of the developing territories where the model actually fit in the same way as the British export her financial services indisputably as the best in continental Europe Not left behind the full exploitation of her highly untapped technology base and optimization of 60 percent of her arable land lying moribund it can indeed be a world superpower while exploiting the mystique of her ancient esoteric knowledge system like the IFA oracle in the Yoruba land among other untapped esoteric religious power spread nationwide fully exploited and turned into science like the Anglo-Americans
A NEW GLOBAL ORDER : WLMNs/WOMILONs
Truly speaking in the World League of Microfinance Nations [WLMNs] no top market nor the middle market is found .That could be extreme We may come down to the level of poly-myopism in the industry and classify the noted markets as both top and mid-ranged while the least Developed Microfinance Nations [LDMNs] or territories are non-starters mainly in the Microfinance Dark ages. Their grades are sensationally hyper-critical and objectively over sensitive using the menace enormity as measurement criteria and highly unprejudiced.
The neomarxist free market envisaged to rival neoliberalism presently and even though through its instrumentality is far older than neoliberalism has no global structure .With the rise of Bretton Wood treaty United Nations was formed in 1944 and named by FDR .The World Bank and the IMF followed thereafter spreading the tentacles across the globe .Hence a global structure was created based on the Keynesian ideology and by the late 70s to early 80s Adam Smith free market principles gained renaissance through neoliberal exponents Milton Freidman and Fredrick Von Hayek The rise of globalization was added plus to western powers profiting immensely from its inequity .On the hand the antiglobalisation protesters worldwide unfortunately protesting at the cost of their lives have no voice which neomarxism brought as relief to their salvation door .It is expected to cover world poverty market—approximately 80 percent of world population .To erect structure for elusive equalitarian globalization they also need a voice –the international macro financial architecture to complement the effort of global mainstream market
WLMNs is equivalent to U.N. OR can be called United Nations For Macro finance [ UNFORM /UNFM ].

SOURCES OF MICROFINANCE FUNDING
THE BACKGROUND PRINCIPLES OF MICROFINANCE
CREATING A CONDUCIVE CLIMATE FOR ENTREPRENEURIAL DEVELOPMENT
During the industrial revolution or Lysander’s period around 1800 J.B. SAYS a French economist observed that an entrepreneur is the one that shifts resources out of an area of lower yield into a more profitable avenue parading higher productivity and greater yield .But Says hardly mentioned who an entrepreneur is
Centuries after the coinage by Says there had been total confusion about the emerging terminology The definitive appeal was highly vague and ambiguous It is not exactly clear whether a trader or a businessman who hardly create something new is an entrepreneur neither does he create a new satisfaction nor a new demand
Today it seems to include every tom dick and Harry in the business Is that so
Although the neoclassical economist introduced the word into our lexicon the coming of Joseph Schumpeter did more than locate the place of entrepreneurship in the economic analysis Corroborating Lysander’s to a larger extent Schumpeter once described the role and impact of combining credit plus new means of income production flows .This is regarded as ‘ fundamental phenomenon of economic development ‘ and the process known as enterprise is noted as the soul of human material progress . Factors influencing this practice such as cultural development [dominant values] , human capital availability , institutional development and policy choices according to [Utomi,2008]. are fundamental resources available to leadership for the prosperity of their nations. Any abrasion against these ideals better explains why nations are poor .
Unknown to the study More worrisome is the fact the ability of even leadership is heavily constrained in an ocean of ignorant follower ship or where objective follower ship is grossly lacking This would certainly bounce back as unbearable burden on the former and could truncate earlier golden effort .Entrepreneurial revolution will be very hard to attain in the developing territories unless a certain level of information democracy is first attained . This promotes mass enlightenment as the very first requirement of advanced economies .The reason is clear; objective follower ship often makes the work of ordinary leadership more effective . How so wise to follow this ideal which has distinguished the poor nations from the rich and mighty .Information democracy provides institutional incentives for the development of Utomi development factors [UDF] does not need an effective leadership where objective follower ship the very first requirement that could potentially nurtures the former is seriously lacking or ill which can only capitalize capital underdevelopment. Since they control the natural forces that throw up incentive to nurture this leadership effectiveness it holds the ace for rapid capital development of vastly underdeveloped nation . Therefore the relative proportion of information democracy existing in a socio- economic system determines the size of a nation ‘s development capacity
The truth is that only enlightened follower ship can demand for development It is a fundamental phenomenon of socioeconomic development that catalyses entrepreneurial development as the very soul of human material progress .The submission also is that only robust socioeconomic system can nurture maintain sustain and safeguard virile economic system as a platform for entrepreneurial revolution Building up cottage industry from the scratch into a multinational is made possible by such Para macro- economic efficiency. Once social value is created economic value where created and possible can then be sustained and leveraged for capital development [not sustainable development ] to build which is the last stage in the development cycle. market. If indeed this process ‘enterprise ‘ is the soul of human material progress information free market as a social enterprise is the very soul of social material progress .Value innovation can truly be cultivated by it which is the primary function of an entrepreneur .
A micro entrepreneur was identified as the steam engine of industrial revolution The strategic impact of this revolution which was nothing less than the promotion of economic freedom and was first made possible by art of social freedom [information democracy] promoted by the Renaissance [1300-1600] Although a leading exponent of monetarism professor Milton Friedman once noted that without economic freedom there can be no political freedom Circumstances over the last 500years of western civilization has proven otherwise that social freedom is the totality of all freedom brands in the face of ever elusive cultural freedom underpinning the institution of liberty and that without intellectual freedom there can be no spiritual freedom and without spiritual freedom also there can be no intellectual freedom .Also without intellectual freedom there can be no economic freedom and without economic freedom there can be no political freedom. This formed the auto –freedom art of social enterprise or what is called the Great Charters Of Liberty [GCL] functioning according to noted equation which provide a virile framework for a robust socioeconomic system .Inability to liberate the auto-run device of this art has often dampen development zeal in the developing countries market greasing the cycle of counter-development trap imbroglio boosted by the separatist league and then the elusive search for mass development and entrepreneurial revolution perennially persisted in vain.
Utomi [2008] once noted why is high value enterprise not so easily pursued by a lot of interested individuals that really desired to make huge profit .This is not really linked to risk or unpredictable outcomes per say but the realm of this socioeconomic system is structurally beleaguered perpetually alienating the nation from potential development density that might take centuries to nurture and recover .Therefore the cost implication of development forgone accumulated over time multiply as mass poverty truncating the effect leverage of development market policy choices and successive institutional legacies without remorse
The practice of microfinance today in Nigeria has been fraught with structural indignities. Unmanageable credit risk steep interest rates increasing repayment defaults strategic market deleveraging and lack of national disposable data resources are symptomatic evidence of poor performance and lack of national micro financial system .Even where the risk or noted defects are avoided the entrenchment and optimization of the system is another matter The climate noted above must be created for any successful microfinance projects to be cultivated They formed the principles of socioeconomic microfinance that will ensure a sustainable and conducive platform for its cultivation launching entrepreneurial revolution in the long run. These are background principles not related to the industry but a necessity for its success . And Upon this framework the fundamental principles of microfinance can be successfully launched . It not only determines the quality of the practice but also strengthens and multiply its socioeconomic impact .In the microfinance developed territories or advanced grey market besides OECD Club this is grossly lacking or less exploited which fully explains why poverty is still very high there Besides India which unluckily has extensive population market Bangladesh and Bolivia are a poor sample of the industry general problem and the ailment of microfinance usual ineffectiveness and market insensitivities . Policies and institutions have been a colossal failure due to this challenge that took half a millennium for the Anglo Saxon to battle which can only be prevented by resolving the identified socioeconomiasis .The dichotomy between the rich and poor nations was linked to this factor .It is both internally and externally imposed and no matter how they try it keeps strangulating every projected future development agenda from attainment in the territories.

THE NATIONAL HOUSING INDUSTRY AT A CROSSROAD-2

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 .

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.

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.