ByÂ Yinka Kolawole
Mortgage Banking Association of Nigeria, MBAN, have called onÂ primary mortgage institutions, PMIs, operators to get ready for the sectoral reform package to be announced soon by the Central Bank of Nigeria (CBN).
President, Mortgage Banking Association of Nigeria (MBAN), Mr. Abimbola Olayinka, gave the charge recently during the 9th annual retreat for chief executive officers (CEOs) of PMIs, organised in conjunction with the International Finance Corporation (IFC), in Abuja.
According to him, the association has initiated a several programmes to position the sector to be more effective, such as: Liquidity Facility for the mortgage sector, standardisation of mortgage underwriting procedure, publicity and visibility of the sector, human capacity development, and meeting with appropriate authorities to re_work various laws inhibiting the growth of the sector.
“The issues have been brought to the front burner and we are happy with the level of our collaboration with the IFC towards achieving the Liquidity Facility window to be provided for our sector.
“Most important is the need to get the CBN to announce the reforms for the mortgage sector and this is expected to be made soonest. We also encourage our mortgage institutions to be well prepared to receive the announcement by commencing various ways to recapitalise,” he stated.
Also speaking at the event, the Governor, Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, emphasized the importance of the mortgage sector to the global economic development, noting that the responsibility for safeguarding the sector as an engine for equitable economic growth has been brought to the fore with the recent challenges of the global financial meltdown.
“A stable and vibrant housing finance system has an enormous potential for stimulating and promoting economic growth, given that investments in the housing sector accounts for a large component of the savings and retirement plans of the low and middle income families and such investment capital long tied down in home equity can be unlocked by a functional mortgage system to fund new businesses or expand existing ones.
“Housing finance is generally characterized by granting of long tenured loans to purchase, build and renovate residential or commercial houses. However, given the low level and the short_term nature of their deposit base, PMIs have had serious challenges in fulfilling their mandate of providing housing finance on a sustainable basis,” he said.
Sanusi disclosed that the consolidated balance sheet size of all the active PMIs in the country was N336.5 billion as at end September 2009, Total loans and advances N122.1billion, out of which N61.4 billion or about 50 percent were mortgage loans. He added that total deposits including placements amounted to N164.8 billion, while long_term funds available to the PMIs apart from equity was a meager N32.8 billion from the National Housing Fund (NHF). Also, according to him, only 33 of the 99 PMIs met the Mortgage to Total assets ratio of 30 percent while 53 met the Mortgage to Loanable funds ratio of 60 percent.
â€˜Affordability is the bane of Nigeria’s housing problem’
The precarious housing situation in Nigeria has been attributed mainly to issues of un_affordability occasioned by the under_funding of the Federal Mortgage Bank of Nigeria (FMBN) and other related institutions, rather than the dearth of technical know_how in the buildingÂ industry.
Recently someÂ Korean investors visitedÂ the Minister of Works, Housing and Urban Development, Dr. Hassan Lawal, where they expressed their interest to invest in the Nigerian housing sector.
Commenting on the desire of the Korean investors, National President, Real Estate Developers Association of Nigeria (REDAN), Chief Olabode Afolayan said, “The Korean investors are just like any other group of businessmen who want to create business opportunities for themselves and therefore require the Federal Mortagage Bank of Nigeria, FMBN.
So what is the big deal and celebration about their visit and why the jamboree? What interests us as a nation is how to enhance the FMBN with finance to cope with the mortgage requirements of Nigeria and not somebody coming to build houses. When the houses are ready, how do you buy them?”
The Housing Minister had announced during the visit of the Korean investors, that the Federal Government was ready to engage in a partnership agreement with the Federal Republic of Korea in the area of road construction and rehabilitation as well as housing development in Nigeria.
He noted that the development of infrastructure and land reform are cardinal points of the seven_point agenda and the Vision 2020 of the present administration, and explained that the essence of the land reform embarked upon by the Yar’Adua administration is to make land available and accessible to Nigerians and foreign investors.
The minister assured that the Federal Mortgage Bank of Nigeria (FMBN) and the Federal Housing Authority (FHA) would partner with the team to ensure that the goal of the housing project is achieved.
Earlier, a member of the delegation, Philip Yun, said that Nigeria and Korea have a long standing cultural and economic relationship and expressed the interest of the team to build Low, Middle and High cost housing units in Nigeria.
FHA seals N360.4bn housing deal in Nasarawa
The Federal Housing Authority (FHA) has signed a Memorandum of Understanding (MOU) with a United Kindom firm _ Sharp Energy Limited _ worth N1.5 billion (about N360.4 billion), to build 9,500 housing units in Karu, Nasarawa State.
Managing Director /Chief Executive Officer, FHA,Mr. Terver Gemade, disclosed this to Governor Aliyu Akwe Doma in Lafia, to express appreciation to the state government for making available 800 hectares of land for the project.
According to Gemade, discussions on the modalities to develop the new town have already been completed, noting that “the design has already being done, commencement of work on the project is in place and physical work will commence in February of 2010”.
Gemade, who was accompanied by management staffs of the authority and the development partners, said that the Public_Private Partnership project is expected to provide three segments of housing for high, middle and low income earners, respectively.
“It is going to be structured in a way that anybody can afford a house there, we are using the premium of the high income earners’ homes to subsidize houses for the low income earners.
“One bedroom house will go as low as N2.5 million. We call them key workers in this respect because they are subsidized homes”, he said, adding that the subsidized homes will be 1,800 units.
REDAN threatens legal action on Ogun land revocation
The Real Estate Developers Association of Nigeria (REDAN) has threatened to institute legal actions to force the Ogun State government to rescind decision to revoke lands belonging to its members, if all other efforts fail.
The Ogun State authorities had recently published a notice of revocation of about 4324 hectares of land situated and encompassing 1.5 kilometres at the Obafemi/Owode Local Government Area of the state, citing, “land required for the service of the Ogun State Government” as reason for the revocation.
The developers, in their initial reaction, have called on the National Assembly to intervene in order to avert a possible loss of huge investments already made by their members on the land, describing the actions of the state government as a gross breach of contractual agreement.
REDAN President, Chief Olabode Afolayan, explained in a statement that the lands were bought from traditional heads of the area but with full approval of the Ogun State Government, alleging that the move by the Ogun State government is aimed at re_allocating the lands to other firms, not minding the well over N8 billion that the developers affected had already expended on the land.