By Yinka Kolawole

The former Managing Director of Zenith Bank Plc, Mr. Jim Ovia, has called for a complete overhauling of the Federal Mortgage Bank of Nigeria (FMBN) and the strengthening of the Primary Mortgage Institutions (PMIs) if government’s efforts at tackling the nation’s housing problem is to have any chance of success.

Ovia who was speaking at a recent forum in Lagos, lamented that the real estate industry has continued to lag in the economic index of the country despite the numerous potential and opportunities presented by rapid urbanisation, exploding population, sprawling land mass and a virtually untapped mortgage market.

He noted that a whole lot of factors have collaborated to stall the property development venture’s growth, in an industry for which size the Central Bank of Nigeria (CBN) estimated to be N1.1 trillion in 2008.

The former bank chief listed some of the challenges facing the sector to include: problematic land tenure system, the controversial Land Use Act of 1978, bureaucratic and dysfunctional implementation of policies, lack of access to finance and inadequate mortgage institutions and infrastructure.

“The Land Use Act has made access to land difficult as all land is vested in government. The right of occupancy does not confer title and a person’s right of occupancy may be revoked. The Governor’s Consent is required and this leads to a load of bureaucratic bottlenecks.

“Banks and financial institutions are scared away as a result of defective title documents, lack of respect for contract, difficulty in enforcing foreclosure and difficulties in realising real estate collaterals.

Indeed, the current situation is similar to what prevailed in the United States of America until (President) Roosevelt (1933-1945) established the Federal Housing Administration to provide insurance against mortgage defaults for lenders,” he stated.

Ovia highlighted the World Bank’s 2010 Doing Business Report which showed that it takes 82 days to register a property in Nigeria (as against two days in New Zealand), costs 20.9 percent of property value to register a property (zero percent in Saudi Arabia), 13 procedures to register a property (one in New Zealand), 350 days to deal with construction permits (25 in Singapore), costs 580 percent per capita to deal with construction permits (0.6 percent in Qatar) and 18 procedures to deal with construction permits (six in Denmark).

To address the issue, he called for the enforcement of contract laws as well as the establishment of a Construction Banks as is the case in countries like China, India, Singapore and Malaysia. “For the real estate industry to contribute optimally to the nations’ economy, collateralised mortgage titles should be monetised, such that holders of such titles can trade them. This is the practice in all developed economies of the world,”he added.