BY MICHAEL EBOH

An investment banker, Mr. Olu Abayomi-Sanya, has advocated the use of the capital market in addressing the housing deficit in Nigeria.

Abayomi-Sanya, who is the Managing Director, Goldbanc Management Associates Limited, also called for a deepening of capital market through assets securitization.

Asset Securitisation is a process whereby non-tradable or illiquid financial assets are transformed into tradable securities. It involves the transfer of an asset or a pool of assets, directly or indirectly, by the owner of the assets to a special purpose vehicle which is funded through an issue of debt securities or notes backed by the cash flows generated by the assets.

According to Abayomi-Sanya, asset securitisation is very imperative for the raising of funds that are needed to fund the growth of vital sectors of the Nigerian economy such as housing and other critical infrastructure.

To this end, he disclosed that in order to unlock the huge potentials in the capital market through asset securitization, GMA, is organising a day seminar to sensitize the stakeholders on the various forms of asset securitization in particular and how to use the Nigerian capital market to fund the housing needs of   country.

The   seminar, he said is slated to hold in Lagos on Thursday, September 22, 2011.

He explained that the seminar, which is targeted at fund managers, issuing houses, regulators and government agencies in the housing and mortgage industry, operators in the capital market among others, will bring about an increase in the understanding of the various benefits of asset securitisation.

For instance, Securitization offers a numbers of advantages to originators, to the investors and to the financial system of the country. From the originator’s perspective, securitization improves the liquidity position by replacing receivables by cash. It removes assets from the sellers balance sheet, thus liberating capital for other uses. This leads to restructuring of the balance sheet by reducing large exposures or sectoral concentration, he said.

Abayomi-Sanya noted that the Nigerian capital market has not been maximally explored to play a major role in making fund available for housing and urban development in Nigeria.  He said that speakers at the seminar will talk on how to link the housing sector to the Nigerian capital market.

The challenge, therefore, is to render a housing financing system that will be able to deliver a robust housing finance system.  Hence, there is need to link the housing sector to the capital market by converting or securitizing mortgage loans that would be traded in by loan originators through the secondary mortgage market.   This way, more funds are created and more potential homeowners will be able to access funds to build or buy their own homes.  Furthermore, pressure will be lifted off the banking sector in terms of the myriad of investments and businesses it may have to finance, he said.