By Kingsley Adegboye
The importance of housing as a basic need to man, cannot be over emphasised. But to make housing available to people requires an effective mortgage system for funding housing in any country , just as the country’s economy must be sound to support the country’s housing needs.
In other words, lack of adequate or poor housing facilities are a reflection of poor state of any economy. In Nigeria, mortgage system has been grossly ineffective, hence the issue of housing finance has remained a major constraint to housing delivery.
Speaking to Vanguard on the sidelines of Annual General Meeting of Propertygate Development and Investment Plc. recently in Lagos, the Managing Director and Chief Executive Officer of the Lagos-based real estate and investment company, Mr. Adetokunbo Ajayi, said the Nigerian housing sector is today facing some challenges that must be tackled to make the system provide the required services that would accelerate economic development witnessed in other emerging economies.
Ajayi observed that the impact of mortgage operations or system by the Federal Mortgage Bank of Nigeria FMBN, the apex mortgage bank in the country and Primary Mortgage Institutions PMIs in Nigeria, is below expectation as they lack the wherewithal to mobilise requisite resources for commitment towards the fulfilment of their objectives.
According to him, the consequence is that their impact remains unfelt by the populace as indicated by the low percentage of mortgage loans to Gross Domestic Product GDP, adding that the establishment of the Federal Mortgage Refinance Corporation to mobilise mortgages for those who need loans for housing projects across the nations, has not helped matters
He therefore, called for enhancement of housing finance process that will meet the challenges of funding the housing deficits gap, particularly to the low income group in the country, adding that the federal government should equally promote the development of efficient secondary mortgage market by strengthening the capital base of mortgage originating institutions.
Propertygate boss further called for the promotion of rural housing programme through market support incentives for assets collaterisation through mortgage origination to make finance available for the development of Micro Small and Medium Enterprises MSMEs.
Insisting that mortgage finance is a key component of the government’s approach to overall economic development, which has remained scarce due to the limited supply of loanable funds with longer-term maturity, Ajayi said the dearth of mortgage finance has adversely affected the process of capital formation in Nigeria, pointing out that this factor, given the clear signs of strong housing demand nation-wide, is undoubtedly a major factor fuelling the housing shortage in the country.