Though Nigeria is a larger economy, many African countries including its ‘small’ West African neighbours, Ghana and Gambia for instance, have lessons for the country (Nigeria) to learn in various sectors, particularly housing, where it is lagging.
Nigeria has 17 million housing units deficit and this has been attributed to a number of factors, prominent among which is the absence of mortgage or other forms of housing finance for buyers.
But unlike Nigeria, Ghana has only 1.7 million housing units deficit with an active mortgage sector. In Ghana, houses can be paid for over 30 years. Both the Ghana Homes Loans Bank (GHL) and the Housing Finance Company Bank (HFC) are the leading providers of mortgage facility to home buyers.
Individuals acquiring housing units in Ghana require a minimum initial payment of 15 percent, a Ghana Real Estate Market Review compiled by a Lagos-based real estate firm, Northcourt, has shown. This is several steps ahead of Nigeria where minimum initial payment for housing hovers between 20 and 30 percent, depending on the perceived risk level of the buyer.
According to the Northcourt market review, the mortgage lender provides the balance 85 percent.
“GHL secured $60 million from the Overseas Private Investment Corporation (OPIC) to address the demand for affordable housing by providing finance for constructing homes at the Apolonia City,” says Tayo Odunsi, Northcourt CEO.
Odunsi points out that in addition to this, the government has started $190 million mortgage and housing finance window with a kick-off amount of $19 million every year for the next five years.
A critical look at the Nigerian housing market and the 17 million housing units deficit shows that the deficit leans heavily on affordable housing for low income earners. Apparently, nobody is building for the poor because, according to house supplier, there is no incentive from the government.
“The environment is not enabling; that segment of the market is a pool of risk and there is no encouragement for the private sector from the government; we need some form of incentive to enable us provide housing for that class of buyers,” Pascal Oforkansi, a Lagos-based developer, explains to BusinessDay.
But in Ghana, in order to encourage private developers, government has put in place a five-year corporate income tax holiday for the construction of affordable housing.
On its own, the government has begun construction on 250,000 affordable housing units across the country to reduce the country’s 1.7 million housing units deficit. This, according to the Northcourt market review, is part of an eight-year housing project in the country.
Presently, the Ghanaian government is constructing 10,000 housing units in partnership with a Hungarian firm, Solin, and to ensure speedy delivery, Polystyrene Concrete Technology is being used in the construction and the objective, according to Odunsi, is to construct 2,000 houses annually.
Unlike Nigeria where there is near-absence of mortgage, Ghanaian residential property market is quite active, averaging an estimated 87,000 sale and lease transactions annually. Accra, Kumasi and Tokoradi are said to lead by volume and value of transaction.
Political and economic stability have supported the growth of the middle class in Ghana, Odunsi notes.
Ghana is ahead of Nigeria in terms of volume and value residential market sales and leases, due largely to the un-affordability and inaccessibility of mortgage to those who need it to buy or build houses.
Poverty and low income have conspired to make mortgage unaffordable to many Nigerians. Based on the terms of mortgage structuring, which requires not less than one third or 33.3 percent of a borrower’s income, with N30,000 minimum wage, the borrower has to deduct approximately N10,000 for loan repayment, which may be a burden for 30 years.
Adeniyi Akinlusi, CEO, Trustbond Mortgages, emphasises that many households in Nigeria cannot own homes through mortgage because, given their low per capita income, they won’t qualify for mortgages.
CHUKA UROKO
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