What government should do to address housing challenges in 2017
That Nigeria has seemingly intractable housing problems that have dove-tailed into a demand-supply gap estimated at 17 million units is no longer news. What is news instead is that relevant stakeholders in the housing sector, especially the government, are apparently at their wits end.
Though efforts are being made at individual and organizational level, there is still a missing link which is the reason for “where we are” as a nation with huge housing deficit, no large scale residential developer, macro-economic challenges, buyer un-affordability, and legal and regulatory bottlenecks.
Roland Igbinoba, President, Pison Housing Company, and MD/CEO, FHA Mortgage Bank, who gave this hint in Lagos recently, added that lack of adequate and effective institutional intervention in the sub-sector, lack of policy execution, lack of cheap and long term financing (both on the supply and demand side), and no investor incentives are also reasons for “where we are” in housing delivery.
Igbinoba, who was a guest speaker at the BusinessDay Knowledge Sharing Lecture Series, said that government had a big role to play by deliberately coordinating efforts across the supply and demand related institutions including Federal Mortgage Bank of Nigeria (FMBN), Nigerian Mortgage Refinance Company (NMRC), Federal Housing Authority (FHA), National
Housing Fund (NHF), Real Estate Developers Association of Nigeria (REDAN), etc.
“A successfully coordinated approach at the presidential level will subsequently pave the way for a strategic and successful advocacy for all the regulatory and legal reforms as contained in the National Housing Policy 2012”, he said, adding, “a coordination of all the relevant agencies will, in the immediate term, attract foreign investors and new building technologies into the country”.
Igbinoba pointed out some deliverables of a coordinated approach which, on the supply side, include new building technologies, low cost housing, improved land acquisition processes, artisan training and capacity building, improved land management, and zoning, urban planning and renewal.
On the demand side, the coordinated approached would achieve long term financing and cheap funds, improved risk for lenders, housing microfinance, social and rental housing, fiduciary lien mechanism and housing cross subsidy.
Notwithstanding their funding challenges, both FMBN and NMRC remain significant interventions in the housing sector by the government and, according to the Pison Housing boss, mortgage loan at single digit interest rate was still possible with FMBN, especially for patient borrowers, through the NHF.
The NMRC, he explained, has core function of leveraging funding for mortgage refinancing and, by so doing, provides liquidity for the mortgage market to refinance the mortgage portfolio of its member banks, and improves affordability by reducing mortgage rates, extending mortgage terms, and lowering deposits.
The company enhances standardization of mortgage origination and administration processes within the market through the Uniform Underwriting Standards (UUS), drives reforms to the enabling environment for mortgage lending and title perfection through advocacy of a draft Model Mortgage and Foreclosure Law. It also accelerates the creation of new mortgage products, promotes affordable home ownership for Nigerians and grows the contribution of mortgage sector to GDP in Nigeria.
He recalled that in July 2015, NMRC successfully issued a 15-year N8 billion Series 1 Bond – the first mortgage refinance facility in Africa to achieve this feat. This was done under its N140 billion medium term Note Programme, backed by an unconditional Federal Government of Nigeria guarantee which it has deployed to the refinancing of the mortgage portfolio of its member banks.
In spite of these problems and the nation’s economic downturn which has stifled investments in the real estate market, Igbinoba said 2017 held out hope for huge opportunities in the sector, adding that “following Citibank’s projection of an inflow of foreign direct investments (FDI) into Nigeria in the first quarter of this year, the sector is sure going to be experiencing a positive turn”.
Continuing, he said, there are predictions for the expansion of the nation’s commercial spaces from the present 300,000 square metres to 700,000 square metres in 2017; various real estate developers have budgeted for huge construction of housing units, while state and federal governments have embarked on housing schemes towards increasing the number being supplied to low income earners”
CHUKA UROKO