Towards affordable mass housing – Thisday

By The Citizen
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The establishment of the Nigeria Mortgage Refinance Company is a good idea. But it must be made to perform While Nigeria's significant housing demand has been estimated at 17 million, with an additional two million units needed every year, not much has been done by successive administrations to tackle this challenge. But that, according to the Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala, may change very soon with the establishment of the Nigeria Mortgage Refinance Company (NMRC).

Against the background that labour impact assessment studies in countries with similar demographics and economies as Nigeria estimate that no fewer than five direct jobs can be generated with every new home, and two indirect jobs in housing-related expenditure, this is a move in the right direction. However, the success of the scheme is by no means guaranteed. In fact, many analysts are already sceptical that it may be no more than another public relations stunt, and a creation of a needless bureaucracy.

The reservation of those who have little faith in the idea is based on the fact that the Federal Mortgage Bank of Nigeria (FMBN) is already saddled with mortgage financing responsibility. 'Why are we multiplying institutions in Nigeria? The Federal Mortgage Bank should have been empowered to do that. If you have an institution and you are paying billions of naira to workers as salaries and you are creating a parallel institution, is that wise?' asked Mr. Bode Oyewole, a member of Institute of Builders (IOB).

As conceived, the NMRC is a public-private sector initiative with majority shareholding by the private sector. The federal government is a sponsor and also a shareholder. It is backed by a World Bank -zero interest credit of $250 million with a 10-year moratorium. The NMRC is also expected to float an additional N50 billion in bonds as soon as it is operational. Further bond issuances will take place in a phased manner to significantly boost NMRC's resources and liquidity for purchase of bundled mortgage products from the PMIs and other institutions.

Since the ability of commercial banks to deliver mortgage services is limited by the fact that 80 per cent of their deposits are for 30 days, the NMRC, in ensuring greater access to long-term finance, will be key to accelerating the growth of the market for all income levels. And by assuring access to long-term finance for financial and mortgage institutions and enabling mortgages to be issued for between 15 to 20 years, it is expected that the NMRC will be a sustainable instrument for the mortgage institutions to penetrate the largely virgin market, while simultaneously advancing the cost efficiency and effectiveness of the market in general.

We endorse this new approach to the housing market and we hope it results in a revolution in the housing sector. It is also our hope that the initiative will have significant multiplier effects on many other sectors of the economy by unleashing jobs for architects, builders, plumbers, welders, carpenters, painters, interior decorators, furniture manufacturers and other allied artisans and businesses.

However, the misgivings about bureaucratic duplication are equally genuine and should not be discounted, especially with regard to a possible waste of scarce resources. Professor Timothy Nubi, a lecturer in the Department of Estate Management at the University of Lagos, reinforces this fear. 'We have said that much of our resources in this country are for recurrent expenditure - paying salaries and we don't have enough money to do capital projects and we are still creating institutions, creating general manager, creating layers of officers in the new company and the other company….' That summation, we dare say, is a drawback from the idea but nobody can dispute the fact that the need for a mortgage system that works.

We therefore hope that the relevant authorities will take into account all the criticisms as they seek to promote affordable housing for all Nigerians through the instrumentality of the NMRC.