The nation’s housing deficit put at 15 million due to lack of strong mortgage sector has been said to result from an underdeveloped insurance sector, because of lack of long term funds that is needed to fuel development across the sectors. Insurance by its nature is the mobiliser of long term funds that assist development of other sectors, of which mortgage is a major beneficiary.
This mismatch, expert say is why there are so many unsold properties as well as untenanted houses in major cities across Nigeria, because the mortgage sector that ought to support funding and acquisition has not grown, due to lack of insurance.
Yemi Soladoye, managing director, Risk Guard Africa Limited said before now and in the last five years, insurance industry did not see the need to collaborate with other financial service players, which would have helped to sell insurance through their various channels.
In this case, insurance could not take advantage of the sales channels of other service providers say the banks, mortgage firms, corporate societies to sell its products.
Rather, it was seeing other providers as competitors rather than collaborators and this is why the mortgage sector remains underde
ance that you can get funds of long term gestation and once you don’t have that, you don’t have mortgage.
“We have houses all over Lagos, but nobody is buying them or renting them because the insurance aspect of it is lacking.”
According to Soladoye, the mortgage sector has not seen the need or the importance of insurance in its activities, the insurance people instead of seeing the banking sector as collaborators they were seeing bankers as competitors, whereas we can get a lot from bank assurance which is a collaboration between insurance and banking sectors.
“When I look at the aspect of usage, this may take me to the fact that we have restricted ourselves to the traditional distribution channels, that is, the insurance broker option, and this is what the Market Development and Restructuring Initiatives (MDRI) packaged by the National Insurance Commission (NAICOM) try to address.
“The target is to open up the market to non-traditional distribution channels, that is, through micro insurance, micro finance banks, cooperative societies, bank assurance the Shoprites, the Mega plaza and these are places where you could distribute micro insurance products, he noted.
Also, it will help the system are independent network providers. These are people who have stayed close for long and think they has learnt enough about insurance and now can run an insurance marketing outreach and they will be licensed for such.
Nigeria, as a country, has a housing deficit of about 15 million and needs approximately 45 trillion naira to meet that deficit.
This was disclosed by Jacques Troost, executive director, Personal and Business Banking, Stanbic IBTC recently.
“There is a huge housing deficit of about 15 million homes in Nigeria, and the country needs approximately N45trillion to conquer that deficit. This can only be achieved if affordable housing can be made available to low income earners who constitute the vast majority of the work-force and if mortgage institutions are able to offer cheap mortgages to potential home owners,” Troost declared.