By Yinka  Kolawole
There is no doubting the fact that there is a housing crisis in Nigeria, with a huge housing deficit currently estimated to be 17 million units.

This has been attributed to a number of factors such as lack of easy access to land, paucity of funds and the almost non-existent, or at best inefficient, mortgage sector in the country, among others. Accessing funds either by property developers for building of houses or individuals to purchase houses has been a herculean task in the country. Where the funds are available, they are either given at ridiculously high rates or at low tenor.

In an attempt to address the issues of housing finance in the country, the federal government the National Housing Fund via Decree No. 3 of 1992, which states in Section 3 that resources of the fund shall consist of the following: Contributions by Nigerians both the public and private sectors; Investment in fund by commercial and merchant banks; Investment in the fund by insurance companies registered under the insurance act and; Financial contributions by the Federal Government for long-term loans.

It mandated public workers and employees of organised private sector to contribute 2.5 percent of their basic salary into a pool to be administered by Federal Mortgage Bank of Nigeria (FMBN), from where they can apply for mortgage loans at concessionary rates to purchase, build or renovation their houses.

Specifically, Section 5 of the Act stipulates that every commercial or merchant bank shall invest in the fund 10 percent of its loan and advances at an interest rate of 1 percent above the interest payable on current account by banks, to be enforced by the Central Bank of Nigeria (CBN). But there is no indication that banks have ever complied with this requirement.

Findings have however shown that the financial institutions mandated by the Act to provide resources for the Fund, that is, banks and insurance companies, have not being complying with this provision. The CBN is also a culprit in this infraction, because the apex bank is supposed to collect contributions from commercial and merchant banks as stipulated by the Act at the end of every year and not later than a month thereafter, and remit same to FMBN within two months of the collection. But the CBN has not been enforcing this provision.

Investigations show that in 1998, total loans and advances for 88 banks in Nigeria amounted to N327.2 billion; in 1999, 90 banks had total loans and advances of N270.2 billion; 2000, 89 banks had N519 billion total loans and advances; 2001, 90 banks had N728.3 billion, while in 2002, 90 banks had total loans and advances of N721.1 billion. The total loans and advances for all the banks between 1998 and 2002 was N2.566 trillion.

Going by the NHF Act, the amount of money the banks ought to have invested in the NHF for the five year period amounted to about N256.6 billion, representing 10 percent of their total loans and advances for the period.

In 2010, total value of loans and advances by 12 public quoted banks that passed the CBN’s stress testincreased by 7.82 per cent from N4.86 trillion, in 2009, to N5.24 trillion.

The banks include Stanbic IBTC Bank Plc, Access Bank Plc, DiamondBank Plc, Ecobank Nigeria Plc, First City MonumentBank Plc, Fidelity Bank Plc and First Bank of Nigeria Plc. Others are Guaranty Trust Bank Plc, Skye Bank Plc, Sterling Bank Plc, Zenith Bank Plc and United Bank for Africa Plc.

Going by these figures, the banks should have invested N486 billion in NHF in 2009 and N524 billion in 2010.  This means that for the period of 1998 to 2002, and the year 2010, investment from banks into the NHF should have been N3.576 trillion, not minding the years in between.  If this had been invested in the NHF, a lot of money would have been available for housing development and delivery, which would have drastically reduced the housing deficit in the country.

Also every registered insurance company is expected to invest a minimum of 20 percent of its non life funds and 40 percent of its life fund in real property development of which not less than 50 percent shall be paid into the fund through FMBN at an interest rate not exceeding 4 percent. But investigations revealed that insurance operators are not even aware of this provision.

The Act also stipulated that the Federal Government should make adequate financial contribution to the fund for the purpose of granting of long term loans and advance for housing development in Nigeria, which has not been the case.

According to FMBN, total NHF collection as at February 2012, from inception, is a mere N81.597 billion from 3,657,354 registered contributors. But it is clear that If all stakeholders in the funding of NHF play their roles adequately, the mortgage sector in Nigeria would be immensely boosted and the housing deficit will greatly reduced.