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CBN intervention stalls N40bn Lagos mortgage scheme

Yinka Kolawole
The on-going banking reforms occasioned by the intervention of the Central Bank of Nigeria (CBN) in the sector last year has hampered the implementation of the N40 billion Lagos mortgage scheme in partnership with five banks.


It would be recalled that, in an effort to address the problem of housing in the state, the Lagos State government had in 2008 unveiled an initiative to set aside N40 billion to set up a mortgage scheme, to be propelled by five banks, namely – Oceanic Bank Plc, Skye Bank Plc, First Bank Plc, Access Bank Plc and United Bank for Africa Plc, targeted at public servants and employed citizens of the state.

The scheme is to help facilitate access to affordable mortgage facilities for over a 25-year period at a maximum interest rate of 10 per cent that would enable low and medium income earners own their own homes. However, two years after launching the scheme, there is no evidence that any resident has actually benefited from the scheme.

The State Commissioner for Finance, Mr Rotimi Oyekan, recently lamented that the recent unfavourable development in financial circles which hamstrung the banks that form major stakeholders in the Lagos State mortgage finance scheme has slowed down the programme, adding that government will continue to explore alternative means of making the scheme a reality.

“Government will continue to dialogue with the fund providers with a view to actualising the intention of the Mortgage Scheme. The conviction of the essence of the scheme is real. The dream is alive and hopefully the results will soon manifest in the first beneficiaries taking ownership of their properties through the mortgage scheme,” he said.
Even the National Security Adviser (NSA), Gen. Aliyu Gusau (Rtd), only recently faulted the banking reforms, saying: “the on-going CBN intervention seemed to have damaged economic activities in the banking sector to the detriment of the larger society.”

It would be recalled that the CBN Governor, Mallam Sanusi Lamido Sanusi, fired the executive management of eight of the 24 banks in the country last August and October-having found the institutions to be in grave situation after a special audit jointly conducted by the apex bank and Nigeria Deposit Insurance Corporation (NDIC).

CBN consequently, provided N620 billion in liquidity and loan support to the eight institutions, stressing that lax management had left the banks dangerously undercapitalised. These institutions have since been taken over by CBN appointed managements, running the banks as going concerns until new investors are found to recapitalise them.

Given the provisions for bad loans, which the rescued banks and other banks were compelled to make by the apex bank, banks have since shut their doors to borrowers. The precarious situation has also been compounded by the CBN’s proposed categorisation of banks and proposed scrapping of universal banking within the next 18 months.

The prevailing housing policy of the state government has made it difficult for an average Lagos resident to acquire a flat in any of the state government’s estates. Right from the inception of the democratic dispensation in 1999, the state government housing policy seemed to have de-emphasised the construction of low-cost housing units in the state. Cost of flats in millennium housing estates developed by the state as well as estates owned by corporate estate firms are far beyond what civil servants, workers and retirees in the state can afford.


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