Once again, Nigerian politicians and their parties are out campaigning for support from the citizens, making promises of ‘good’ things to come when a new government is formed with them as players.
Recently, the ruling All Progressives Congress (APC), which has Bola Ahmed Tinubu as its presidential candidate, unveiled its manifesto that will serve as its working document if it retains power after the general elections slated for February 2023.
The 80-page document tagged ‘Renewed Hope’ is overly ambitious in its propositions, considering the parlous nature of the economy of the country, which has styled itself Africa’s largest economy.
We commend the thinking and reasoning that went into the compilation of the document, most especially in the choice of its theme. This is because, unarguably, there is no more hope in Nigeria and its leadership at the moment.
The document has been smart enough in saying something different by artfully dodging the usual flowery yet empty promise of delivering millions of houses
In a few instances, however, the APC document inspires hope. One of such instances is housing. The document has been smart enough in saying something different by artfully dodging the usual flowery yet empty promise of delivering millions of houses.
In 2015, the party promised to deliver 1 million housing units yearly, but seven and half years down the line, its government has been able to complete only 2,465 housing units under its National Housing Programme (NHP).
Rather than going the same route of promising to build millions of houses, which it will not do, APC has chosen to work on federal housing agencies as a way to promote home ownership.
It notes that Nigeria has federal agencies that are too small and fragmented and has, therefore, promised to merge them into a new, more competent body to ensure greater cohesion and efficiency for addressing housing deficit.
Though the party is silent on the names of those federal agencies, we are aware of a few of them like the Federal Housing Authority (FHA), Federal Mortgage Bank of Nigeria (FMBN), National Housing Fund (NHF), Family Home Funds (FHF), Nigerian Mortgage Refinance Company (NMRC), etc.
These agencies are really fragmented even though some of them are big, but not to compare with institutions like Fannie Mae and Freddie Mac, which are federally backed home mortgage companies created by the United States Congress to guarantee housing loans.
We are excited by the merger proposition, more so as the new entity will inherit the functions of existing housing authorities and shall be adequately capitalised by the Federal Government.
The new agency, we are told, will have a three-fold mandate including granting low-interest rate mortgages directly to borrowers; guaranteeing qualified mortgages issued by banks, and purchasing mortgages from private banks.
The party expects that guaranteeing and purchasing of mortgages will incentivise banks towards mortgage lending, and will deepen the secondary mortgage market while banks will also be encouraged to engage much more in the provision of affordable consumer loans for automobiles and expensive domestic appliances.
To encourage home-ownership, the party has also promised to work in conjunction with the National Assembly and state governments to review and revise the Land Use Act, the age-old Act that has held the country’s economy down because of hostile land ownership and administration in the country.
It will also streamline and rationalise the land conveyance process. In this way, it hopes to lower costs and delays and promote more efficient use of land. Expectation is that this more efficient allocation will bolster the housing industry and lower costs for investors and consumers.
Many Nigerians have hailed these propositions, saying they are good. We are in agreement. But we have our fears and reservations. As lofty and idealistic as they seem, more so in a country where home-ownership is a big issue, implementation and funding are still huge sources of concern.
We see good reason in merging the federal agencies into one bigger and more efficient entity because that will reduce, if not eliminate, wastages and bureaucracies in the financial and housing system.
But the idea of funding the entity by the Federal Government leaves a sour taste in the mouth, bearing in mind that government’s revenue has been going south in the last few years.
FMBN, for instance, has been in dire need of recapitalisation to the tune of N500 billion but government has not been able to do that in the last four to five years for reasons of poor revenue. In the same vein, the FHF came with the plan to build 500,000 affordable homes, but in the last four years when it started operations, it has delivered a little above 11,000 affordable homes due to paucity of funds.
Government, it has been said time without number, has no business in business including housing. The best any government can do to promote business and economic growth is to provide an environment that enables and promotes private enterprise.
For housing, easy access to land and cheap capital are critical and so, we believe that a well-thought-out policy that makes land available for developers is ideal. Similarly, a dedicated funding arrangement that guarantees single digit interest rate on housing loans should be given priority attention.
Over all, we see APC’s plan to fund housing mortgage as another government in business which has never worked in Nigeria.
We, therefore, advise that rather than plan to recapitalise a mortgage agency to take care of housing, the plan should be to concentrate on making land available and also creating policies around access to funding that will enable banks to fund mortgage projects.
