By Jude Njoku
Whereas mortgage finance contributes between 50 and 80 percent to the gross domestic product, GDP, of European countries and the United States of America, it (mortgage finance) contributes less than one percent of Nigeria’s GDP.
In fact, only about five percent of the 13.7 million housing units in Nigeria are financed with mortgages.
Nigerians are deterred from applying for mortgage facilities because the interest rate on mortgage loans oscillates between 17 and 21 percent.
Against this backdrop, construction cost experts who rose from the 4th Building and Construction Economic Round Table, BCERT 4, put together by the Quantity Surveyors Registration Board of Nigeria, QSRBN, have called for a drastic reduction of interest rates on mortgages for home ownership in the country.
Describing the prevailing interest rate as too high to make mortgage an attractive route to home ownership for Nigerians, participants at the round table advocated that “interest rates on mortgages for home ownership should be drastically reduced and there should be generous concessions and drastic reduction of duties on housing materials and machinery to ensure affordability of housing by Nigerians”.
In a communique signed the President of QSRBN, Mallam Hussaini Adamu Dikko and the Registrar, Mr Godson Moneke, the construction cost experts lamented that housing and construction account for less than four percent of Nigeria’s current rebased GDP.
“Home ownership in Nigeria is just 25 percent of the population as against 61 percent in Benin Republic, 41 percent in Lybia, 56 percent in South Africa, 63 percent in Brazil, 70 percent in the United States, 73 percent in Kenya and 90 percent in Singapore,” the quantity surveyors noted.
They observed that home ownership is poor in Nigeria because most Nigerians cannot afford this costly asst without government support and subsidies. To compound the housing problems, the cost experts regretted that government is no longer involved in direct construction of houses, thus subjecting home ownership to the vagaries of market forces as driven by the private real estate developers.
Piqued by the absence of a master-plan on home ownership in the country, the over 500 participants at the round table who described the scenario as a major factor for the current global home ownership rating of Nigeria, called on the government to develop a master plan for home ownership by Nigerians and fund its implementation without delay.
The experts who brainstormed on “developing a master plan on new homes for Nigerians – the critical success factors” at the two day round table, enjoined the Federal Government encourage and fund QSRBN’s current effort to “develop a National Construction Cost Data Base to promote accountability and transparency in the standardisation of costing and pricing of new homes for Nigerians”.
Other recommendations of the roundtable include promotion of research into the use of cheaper alternative building technology in determining minimum housing standards for various segments of the Nigerian households.
*Housing and real estate sub-sector should be used by the government to create employment on a massive scale and increase production within the National Domestic Economy.
*Access to land for housing should be made easier by the repeal of the Land Use Act and abolition of the multitude of taxes and fees on residential houses.
*Government should provide and fund vocational and skills acquisition centres all over the country to train craftsmen and facilitate hands-on skill acquisition by tertiary institution graduates in the building and construction sector who want to enhance their marketability.
*Government should provide primary and secondary infrastructure around all approved residential estates throughout the country so that estate developers are not forced to provide such facilities and pass on the costs to buyers through increased house prices.
*Government should in the short-term intervene directly in housing construction alongside real estate developers to avert the looming housing crisis especially in the low-income segment of the society.
*A substantial percentage of the pensions funds which are long term funds should be used to provide long term finance and mortgage lending for household residential development.
The round table also called on mortgage banks, real estate developers and other stakeholders in the building/housing sector to leverage ample opportunities in the Capital Market for cheaper finance to fund housing development.
They canvassed the strengthening of the Federal Mortgage Bank of Nigeria, FMBN by increasing its capital base for it to remain a sustainable financial institution with capacity to enhance efficient housing finance development in Nigeria. The experts charged the Central Bank of Nigeria, CBN to provide clear guidance to Primary Mortgage Banks, PMBs and other stakeholders on recapitalization, as well as increase surveillance and supervisory activities on the PMBs to ensure their orderly growth, development and effectiveness.