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PenCom lists terms for investing pension fund in housing

Yinka Kolawole
The National Pension Commission (PenCom) has declared that the prospects of investing pension funds in housing development in Nigeria will remain dim until some necessary conditions are put in place.

Head, Investment Monitoring Department, PenCom, Mr. Ehimeme Ohioma, speaking at a recent retreat for Chief Executive Officers of Primary Mortgage Institutions (PMIs), asserted that investing pension funds in housing would depend on several factors such as reviewing of the Land Use Act/Land Reform, improving property registration process, government should provide guarantees in the form of mortgage insurance to lenders, creation of viable secondary mortgage market, creation of a national credit database, continuous review of macroeconomic policies to stabilise inflation and interest rates.

It is a known fact that housing finance constitutes a major challenge to achieving acceptable housing statistics in developing economies such as Nigeria. In fact, the Acting Managing Director, Federal Mortgage Bank of Nigeria (FMBN), Mr Michael Nwogbo, recently noted that the Nigeria’s national housing deficit is estimated at between 12 to 16 million units, with a financial requirement of about N42 trillion.
Stakeholders have been clamouring for investment of the funds in the housing sector which is desperately in need of finance, with accumulated pension contributions said to be running to over N1.8 trillion as at July 2010.
Ohioma also recommended tax holidays, deferrals or tax exemptions on mortgage transactions, streamlining of licensing requirements for construction permits, foreclosure should be emphasised for investors to take possession of their collateral and recover loans as quickly as possible, and mobilisation of fund from the capital market through large_scale securitisation of mortgage portfolios.

Meanwhile, the Deputy Governor, Financial System Stability (FSS), Central Bank of Nigeria (CBN), Dr. Kingley Moghalu, has pledged that the apex bank would help facilitate improvement in the titling, transfer of mortgage assets and early passage of the Foreclosure Laws in order to create a robust legal framework for the mortgage sector to thrive. He however, advocated for a strong corporate governance and internal control to be supported with revised operational guidelines for mortgage banks to handle corporate risks that would emerge.

Moghalu called on mortgage operators to partner with the CIBN, FITC, universities and private sector in the country towards beginning mortgage banking courses in their curricula as a means of promoting comprehensive professional human capacity development. “ This would enhance the capacity levels of the mortgage bankers in the sector and work towards the evolution of mortgage underwriters, brokers, servicers and dealers,” he stated.


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