Q: Give us a bit of your background
My name is Professor Charles Inyangete. I am engaged as the CEO of Nigeria Mortgage Refinance Company (NMRC). My background is in finance and I have been privileged to work across three continents in my early period. And I have served in many advisory roles. I have been involved in driving many transactions both in the government, banking sector and real estate sector. And lately, I also run and manage a mortgage finance institution. Prior to that, I was in academia. That, in a nutshell, is who I am in terms of my background.
What is the role of NMRC?
NMRC will provide mortgage- lending institutions with access to long-term finance at an affordable interest rate, thereby enabling mortgages to be issued by these institutions to Nigerians, at longer tenors and afford- able rates. The provision of mortgage loans at longer tenors will provide the average working Nigerian citizens an opportunity to buy a home and conveniently pay for it. In simple words, NMRC is government-inspired but a private sector-led effort to provide affordable housing for Nigerians through loans accessed from mortgage and commercial banks.
NMRC will contribute to a better alignment of the Housing Finance Programme. Some people buy into a property, the money is already tied down, but when a bank lends to the acquisition of that building the money is tied and the repayment may take 10 years or whatever period. In that period, that money is there but what we are doing is to take that investment from you and deal with the process of the collection.
Meanwhile, we provide you new money so you can lend new. And we will keep doing that. So instead of you having N10bn, we can, over a five-year period, make it become N50bn from your perspective. And that will have a huge multiplier effect. In effect, the refinancing creates liquidity in the market. That is the essence of our existence.
What is your vision for this novel institution? Before I talk about my vision, let me just set a premise for that. NMRC was set up primarily to provide liquidity to the mortgage sector in Nigeria. Prior to that, we have had mortgage financing done to a very low level. And in fact, if you look at our economy, mortgage financing constitute less than one percent of our GDP.
So, NMRC’s role is critical to allowing that industry to grow. And my vision is to see an NMRC that is built on four pillars. The first pillar of my vision is innovation. We cannot in the 21st century build an institution that ignores technology. So, I want to see an NMRC that has built a mortgage market that is technology-driven. And in that mortgage market, it opens up a transparent process for the processing of mortgages and for the payment and analysis of the entire market.
The second pillar of my vision is integrity. I believe an institution of this kind must be perceived to the public to operate in the highest level of integrity. And that integrity is the integrity of the individuals, myself as the CEO; the integrity of our Board, staff. The third pillar of the vision is in- dependence. I believe I should have a degree of independence as the CEO to be able to drive the vision and deliver on the mandate of NMRC.
Without independence, that cannot be done. The same goes for the Board. I expect the Board to provide the supervisory role to me as the CEO to operate on an independent status to be free from any external excesses or undue influence. And the final and perhaps critical of all, from the perspective of every Nigerian, is inclusion. Inclusion is what defines your ability to be able to reach out to Nigerians and provide affordable mortgages for home ownership. Inclusion is what levels the playing field, it is what makes it clear that when you walk through the door as a primary mortgage bank, you will be treated fairly because we have the systems. We have just recently published underwriting standards that are uniform for the entire market. And these underwriting standards are to be ap- plied across all of the financial services sector relating to mortgages.
How do you intend to achieve this bold vision?
Let’s take the first one, innovation. As we speak, we have engaged our stakeholders in a process of building the market platform that I talked about. The market platform is one that would allow NMRC to link up to all the primary mortgage banks and any deposit money banks that want to be part of NMRC’s system for the refinancing of their mortgages.
That platform allows us to operate transparently, efficiently and to analyse and build a market from scratch; something deserving of this nation. So that is part of the key premise. We are also involved in other aspects of government activities. We are involved in making sure that through the 10,000 housing mortgage units that were part of the process that is ongoing, that when these mortgages that are performing come through, we stand ready to refinance them.
We are also involved in trickling down to the lower level of affordability by bringing in a lower market segment to enhance affordability at a lower level. That is part of the support that we have got and that is coming at a latter stage of our initial operations. We are planning to go to the market this quarter to raise funding for refinancing. That process is advanced, we are going through the processes of approvals to have it kicked off. So, we will raise money from the capital market, we will use it to refinance the portfolio of several of the primary mortgage banks that have already given us those mortgages. Then we will use the funds that we provide to them to refinance the mortgages.
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In other words, to issue new mortgages to Nigerians to buy their properties. The vision, in a broader picture, is to have mortgages available to everyone that deserves it, to bring affordability to the whole home ownership process. And that vision sees the creation of mortgages in their hundreds of thou- sands as opposed to in their tens or hundreds. And we are looking at a market that potentially, if we were to hit our target of say 2 to 3 percent of the GDP, we are looking at a market that is close to a trillion naira.
How will NMRC contribute to affordable housing?
The successful implementation of this project will significantly increase the ability of the working Nigerian to buy a home by supporting the current housing demand with access to affordable finance through mortgage lending banks. Developers will now need to meet this cash demand for housing by building homes of real value and not of speculative value.
The World Bank together with Federal and State governments as well as other partners will continue to work on improving the enabling environment for private developers to operate. Major steps have been taken first to re- position the Federal Housing Authority. With the introduction of NMRC, State governments are being encouraged to reduce the cost of housing delivery, these include making lands easily available, timely provision of property titling, providing infrastructure, and reduction on transaction costs.
What should Nigerians expect in the next five years?
In the next five years, we have projected that we will refinance close to the region of 400,000 to 450,000 mortgages for one segment of the market. When we go down to the lower segment of the market we expect to refinance proportionally larger number than that. So Nigerians can expect to see mort- gages refinanced in their hundreds of thousands perhaps close to a million in that period, depending on the buoyancy and vibrancy of the market and their activities in that period.
Remember we are constrained also by the absence of the housing stock. So we have to have the building or housing stock accelerated as well to allow the refinancing process to also accelerate. If we have an acceleration of the building stock and more affordable homes coming into the market, we will also accelerate the refinancing, so we could achieve much higher numbers than what I have given you.
As a new institution, what leadership style will you bring in as CEO of NMRC?
I bring a style that is based on simplicity and a desire to achieve what we set out to do, not a leadership that is grandiose, not a leadership that sets out to say too much but a leadership that sets out to demonstrate by what we achieve. And so, mine will be a very simple approach to things but it will be hands-on approach to things. I will roll my sleeves and get the work done without forgetting my strategic role. But I also will not ignore the operational role in ensuring that the best strategies don’t just remain strategies but they get realised.
How do you achieve your vision?
Like I said earlier, one of the pillars of my vision is inclusion and that in itself defines the institution that does not discriminate; an institution that sets out to Nigerians regardless of where you come from. Because the centre of finance in Nigeria is Lagos. But ultimately we will have presence in all the geopolitical zones of the nation as we move forward.
However, even from the first day our activities should be able to cover every aspect of the nation. By extension, every bank has presence in every state and most of these banks are part of the NMRC market. Through that, we will have that extension. But we would also like to have a presence at some point in time in the key geopolitical zones of the country.
How long do you see that happening?
I see that happening in about three years. By then we would have established sufficiently to spread out. But our impact will be felt everywhere in Nigeria instantly. Let me also say something that people lose sight of: We are established not just to focus on mortgage refinancing per se but also to create an environment where it is conducive to do business. And so we have looked at the legal structures, the foreclosure laws in Nigeria, we have set out to reform it. We have a draft foreclosure law in discussion as we speak. These will be put through the pilot states for adoption. When they do, we would then have created a mortgage approach that allows you to fast-track a mortgage registration process as well as a titling process running concurrently.
Also, as part of this market building and environment building, is the issue of underwriting standards. The uniform underwriting standards which allow any player in the mortgage industry that wants to be part of the refinancing to be able to know the exact process from origination right through to the servicing of every mortgage. So these are part of the things we are doing in levelling the playing field.
What would differ would be just the logo of the institution that you go to borrow from. And so, when we are looking at the mortgage, we know it has been processed with the same underwriting standards. That is the first thing we have done. We published the uniform underwriting standards last week.
What do you see as your challenges?
We have huge challenges. I mentioned about foreclosure laws, I mentioned about underwriting standards. We have other external factors. We are in a high interest environment, so affordability is driven primarily by the interest rate in the environment.
In an environment where you have a double-digit interest rate how do you then meet the expectations of Nigerians of a single-digit mortgage rate? That is one of our key challenges. There is so much out there that misrepresents what we were set up to do and part of our challenge is public awareness and we are taking that very seriously. At the moment, we are in a period of electioneering and every attention is focused on the poll.
So perhaps this is not the ideal time of trying to do awareness. But we are all waiting to embark on an extensive public awareness, so we are not swamped and our message doesn’t disappear in the deluge of information out there now. We will go out to tell Nigerians what NMRC is about, what it sets out to do, how they stand to benefit and also to tell the people in the industry how to do what we expect them to do properly. It is part of our key challenge to get people to understand what our mandate is and who we are.
The other challenge is that of acceptance. With a lack of understanding of what you do comes resentment and outright negative perception. That is part of our key challenge, to ensure that the perception of the institution is not misplaced; that it is the right perception and ensure that the misunderstanding out there is eliminated for people to judge us on a proper premise.
There are several other things that are essentially challenging: our economic environment, the cost that feed into the mortgages. Building costs are very high, we need to go all the way down to the construction industry. We cannot just stay at the financing end of mortgages. Remember, mortgaging comes at the end of the process.
There is construction at this end, we have to be a part of ensuring that the construction operates on a basis that the proper prices are established for housing. With Nigeria being a mono-economy, will the fall in crude oil prices not affect the vision of the company?
The fortunes of a nation impacts every activity but we feel even in the low oil price trading environment, with the appropriate fiscal measures put in place, with the appropriate economic management in place, we will ride the storm. And so, we need to give a lot of support to good economic management and give a lot of support to those things that are designed to ensure that we ride the storm. And bearing in mind that there are many other countries that rely on oil but it affects in different ways. It is a world phenomenon. We should not just look at Nigeria in isolation but the impact is well felt in Nigeria because of our reliance on oil. It’s time to diversify our economy. Real estate presents an excellent opportunity for that.
