FG set to de-risk housing sector lending through credit guarantees to developers  

The Federal Government has reached an advanced stage with plans to de-risk lending to what it calls “approved housing developers”, in a new strategy to make the housing sector attractive and viable enough to stimulate growth.
Babatunde Fashola, Nigeria’s minister of power, works and housing, explained that the plans for de-risking lending to intended property developers will entail the provision of guarantees and other credit enhancement to developers, including the issuance of promissory notes to reduce developers’ perennial burden of unbearable and unsustainable financing requirements.
Fashola disclosed this at the African Union for Housing Finance (AUHF) conference which began on Wednesday in Abuja, the Nigerian capital.
“The provision of leverage and guarantees is critical in attracting private sector funds into the industry thereby, creating thousands of affordable houses each year, as well as generating considerable employment and commercial activities,” Fashola hoped, as he delivered a keynote address titled “Housing and Africa’s Growth Agenda” at the conference.
In Nigeria, housing in a population of over 180 million people is an arduous task as the Federal Government seems helpless, especially now that its revenues are dwindling and the economy is under pressure.
“From the inception of government initiative in organised housing finance system to date, only a meager volume has so far been injected into the system, which accounts for less than 0.5 percent of GDP as compared to other  countries like the United Kingdom, the United States and South Africa,” Fashola lamented.
This is despite various government initiatives aimed at curbing the challenge of homelessness among Nigerians.
The minister said a major concern is the present production cost versus the selling price of housing stock in the country, which is beyond the reach of majority of Nigerians, while demand for affordable housing has grown over the years due to population explosion, rural-urban drift and search for a higher quality of life in urban centers.
Another challenge, according to him is that most Nigerians see mortgage loans from government as part of their share of a “national cake,” leading to high default rates and forcing the government to get off the frontline of home provision for citizens and encourage prospective home owners to approach commercial banks whose interest rates are regrettably high.
He also observed that the political will and momentum of the present administration in the nation’s housing sector agenda are further invigorated by the AUHF summit, which, he noted, was taking place a few months after the June 2016 National Housing Summit.
At the event, Godwin Emefiele, governor, Central Bank of Nigeria,  noted that the  country has not yet taken advantage of the huge potentials in the mortgage sector and that the housing finance market is one of the most underdeveloped in world.
“If you look at the housing market in Nigeria and compare it with other developed markets and this is not just limited to Nigeria but the whole of Africa, you will find out the housing market in Africa and in Nigeria is very much underdeveloped.
“The contribution of the housing market to the GDP in Nigeria is less than one per cent. Compare that with the United States which is about 80 per cent of the GDP,” Emefiele , represented at the event by the Director, Other Financial Institutions Department,CBN, Ahmed Abdulahi stated.

 

ONYINYE NWACHUKWU & YANGE IKYAA