As experts are canvassing for a robust, more sustainable financing model for the housing sector, the Financial System Strategy (FSS) 2020 says the Housing Finance Ecosystem Committee as a collaboration is working to develop a domesticated housing finance system for Nigeria.
If Nigeria is serious about closing the housing deficit, which is in the tune 17 million units, there must be a workable housing finance model that will support home ownership among the citizens.
According to housing finance experts, support for housing finance institutions for both the supply and demand sides, and manufacturing of local building materials are germane to affordable housing production and growth of real estate sector.
The experts comprise the Director, Financial System Strategy (FSS) 2020 with the Central Bank of Nigeria, Mr. Suleyman D. Mohammed;
Private Sector Specialist, African Development Bank (AfDB), Mr. Emmanuel Akinwunmi; Head of Research and Strategy Management Department, Pension Commission(PENCOM), Dr. Umaru Farouk Aminu; Head, Business Operations and ICT, Nigeria Mortgage Refinance Company (NMRC); Taofeeq Olatinwo; and Managing Directors of Millard Fuller Foundation and Urban Shelter, Mr. Sam Odia and Saadiya Aminu, respectively,
To them, real estate needs robust value chain system to create value for growth.
For Suleyman, who is the Director of FSS2020, more needs to be done in the area of housing finance if the accommodation gap in the country is to be reduced or closed, and that the Primary Mortgage Banks (PMBs) have a critical role to play in this regard.
He noted that the cost of housing finance in relation to the earning power of the average Nigeria worker is far from each other.
“If you look at the interest rate and the cost of mortgage in Nigeria, it’s exorbitant between 26 and 27 per cent interest rate. That makes the cost of housing finance very expensive and if you look at the earning power of an average Nigerian, that means there is no average Nigerian that can open a mortgage account and access mortgage financing,” he said.
The director stated that high interest rate coupled with cost of mortgage was enough reason why finance experts need to think outside the box.
Suleyman , while speaking with other panelists during the webinar by the Housing Development Advocacy Network (HDAN), themed: “Housing Finance Ecosystem: Matching the Demand and Supply and the Intervention,” suggested domestication of housing finance models tailored to the peculiar situation of the country.
“We have to start domesticating our own housing finance model that will suit our own Nigerian environment and our peculiarity,” he said.
The Financial System Strategy (FSS), 2020 is an initiative of the Federal Government of Nigeria aimed at developing a coherent and internally consistent blueprint, to develop Nigeria’s financial system in achieving its vision to becoming a major international financial centre and the safest, most diversified financial that supports the Nigerian real economy.
The director said that FSS 2020 had come up with the need to rethink and move away from the conventional housing finance model that operates worldwide and “to see if we can domesticate our own housing finance model that will meet our own requirements.”
To this end, he disclosed that an inter-agency committee known as ‘Housing Finance Ecosystem Committee’ has been set up to bring about a robust, more sustainable and more realistic financing model for Nigerian housing sector, which cuts across both private and public sectors,in order to foster affordability.
Explaining the involvement of public and private sectors, he said there was need for government to come into the provision of social housing with a financing model that is sustainable, while the private sector should come in with a private sector financing that would be affordable to the average Nigerian.
Challenges
Suleyman, however, identified lack of capacity by primary mortgage institutions as one of the challenges facing housing finance in the country, suggesting the need for stakeholders and institutions in housing finance to innovate in proffering solutions to challenges in the sector. .
“Even if you look at it from the primary mortgage banks and the secondary mortgage bank, NMRC is a secondary mortgage bank and how much can NMRC proudly say they can afford to pump into the primary market to support the primary market in delivering what is desirable today? We really need to think outside the box to address this thing squarely,” he said.
Suleyman described as ‘apt’ the proposed intervention by CBN to the sector.
He remarked that the FS2020 has achieved a milestone in bringing together different governmental institutions to work together in collaboration under the FS2020 Housing Finance Ecosystem committee.
Such institutions, he said included the CBN, Pencom, NMRC, FMBN and the Nigerian Governors Forum among others.
Other views
Aminu of Pencom, said the nation needed a robust value chain system that creates value for the growth of the the real estate industry.
According to him, capacity building was another key to the development of the industry, commending FSS 2020 for initiating the housing finance ecosystem committee.
Muktar of urban shelter pointed out that debt to income ratio of average Nigerian was very high.
He, however, suggested that through collaboration, solutions must be proffer to increase income in order to increase home ownership.
He said that the company as a leading developer in Nigeria has been able to deliver affordable housing through its strategic focus in sourcing for local materials for construction.
This focus, according to him, would enable it to encourage entrepreneurship and provide employment for people.
Akinwumi of AfDB described the bank as a ‘silent worker’ that is working to eradicate poverty in Africa.
He stated that the bank has been involved in eradicating poverty in Africa by providing resources to both financial and non financial institutions through line of credit.
Odia of Millard Fuller Foundation said the company has built affordable housing that are both functional and affordable.
He argued that houses that meet the basic definition of affordability might not be exquisite but could provide a roof over the head of ordinary Nigerians.
Olatinwo of NMRC, who is also on FSS2020 Housing finance Ecosystem Committee, said the committee is developing a road map to achieve affordable housing and help solve the finance problems of Nigeria through the development of nine building blocks which is been use to develop the road map.
Source: newtelegraphng.
