The Lagos mortgage example

Recently, Lagos State government broke the jinx in Nigeria’s mortgage industry with the flag-off of its ambitious mortgage scheme known as Lagos Home Ownership Mortgage Scheme (LagosHOMS).

This scheme which has special interest and focus on first time home buyers gives successful applicants opportunity to pay back loan to be advanced to them to buy their houses under the scheme in 10 years with 9.5 percent interest rate on the loan.

We see much to applaud here.Though we cannot strictly describe this as ‘global best practice’ considering that elsewhere, in more advanced economies, homebuyers get 25-30 year mortgage with interest rates as low as 4-5 percent, we commend this effort in an environment where distinguishing a mortgage loan from a commercial loan amounts to reinventing the Tower of Babel.

For a state government to come up with a long-tenored and low rate mortgage scheme in a country where mortgages, as offered by mortgage institutions, attract interest rates as high as 17-22 percent and repayment period as short as four-five years simply underscores a commitment to providing a basic need for the low income earner.

Beginning from March 4 this year, 200 families who will apply for the scheme and succeed will get their own homes under the scheme and these successful applicants are going to be first time home buyers.

To show commitment to this scheme, the state government says it saves N500 million monthly for its execution and, apparently, on the understanding that a mortgage scheme would be meaningless without housing stock on which mortgage could be created, the state has  completed 1,104 housing units with 3,156 others at various stages of completion, all dedicated to the scheme.

The state says it is also starting 132 units in Iponri, 720 units in Ibeshe Ikorodu, 420 units in Ajara Badagry, 648 units in Sangotedo Phase II, 216 units in Obele, 36 units in Akerele Phase II, 48 units in Oyingbo, 125 units in Ilubirin and 1080 units in Ijora.

We commend this initiative and salute the wisdom that went into its visioning given that of the 17 million  housing units deficit in Nigeria, Lagos alone accounts for over a million while the rest resides with the low income earners in rural communities in the 35 other states in the country.

In his speech at the flag-off ceremony, Babatunde Fashola, the state governor, said, albeit passionately, that while the state’s Tenancy Law represents his administration’s moral intervention to protect citizens who earn monthly income from landlords who demand multiple year advance payments, LagosHOMS represents their leadership intervention to increase the stock of affordable housing on convenient payment terms.

That was the voice of a leader who has championed many policies and programmes aimed at protecting the poor and the vulnerable in the state and we share his sentiments, though not without reservations.

It is pertinent for us to note that Lagos State, maybe on account of its special status in the country as former federal capital with a lot of opportunities that attract interests from all over the world to it, has championed  a good number of laudable programmes, making it a pace setter for the other states.

We are however, worried that this is a state where, it appears, the feeling of relief does not last long. As alluded in his speech, the governor’s Tenancy Law was adjudged the best ‘moral intervention’ by any leader aimed at saving the weak from the suffocating influence of the strong. Today, the Tenancy Law is just a document whose impact is only imagined, neither felt nor seen by the poor anywhere in the state. The same thing applies to the traffic law which, rather than solving the problem it was enacted for, has compounded situations on the road, creating ‘opportunities’ for all manner of uniformed men and women who extort and feed fat on the poor and the weak in society.

We hope and believe that HOMS will be different, more so when we agree with the governor that with this scheme, the future is here. Again, we see in this scheme a new beginning for many families who may succeed in their applications for the scheme because home-ownership would give them new value disposition.