Nigerian Bankers have agreed to work with the Pension Commission to ensure contributors to the Retirement Savings Account (RSA) use 25 percent of the accumulated N9.03 trillion assets as mortgage loans in line with the 2014 Pencom Act which is still not being implemented.
They also committed to unlock massive lending to the creative industry at not more than 9 percent in new aggressive scheme championed by the Central Bank of Nigeria (CBN).
The two decisions were taken at the bankers committee meeting held in Abuja on Thursday.
Hamba Ambah, FSDH Merchant Bank who briefed alongside his colleagues and CBN officials on the outcome of the meeting said unlocking the huge potential in the real estate sector through mortgage financing is one of very important issues discussed.
“Another issue that was touched was the fact that the banking industry is going to work closely with the pensions industry,” she said.
She recalled that since the pension reform act was enacted in 2014, pensions assets under management have reached an impressive N9.03 trillion and the fact that pencom is looking at releasing 25% of that sum to make it possible for the RSA holders to use this as equity to
access mortgages.
Out of the over N9 trn pension assets, almost 70 percent is invested in government securities. “25% of N9 trillion is well over N2trillion. This is huge and can be used to stimulate demand and create mortgage loans in our economy,” Ambah noted.
She said the bankers agreed that the Central Bank will talk with various regulators and state governments to simplify the whole process in a way that many more people can access mortgage financing and thereby stimulate demand in our economy.
“Another important issue discussed is around the real estate sector and mortgages and releasing the trapped liquidity that currently exists in various investments that people have in real estate, land or in property and in recognizing that there are some obstacles but we must find a way to navigate through,” Kayode Akinkugbe, Chief Executive Officer, FBN Quest Merchant Bank corroborated.
“This is another important initiative that we feel will help boost and show the contribution of the banking sector towards creating value for the consumer,” he said.
He further informed that the lenders discussed how they can collaborate with the relevant regulatory agencies, how the CBN through advocacy can help to strengthen compliance with the already initiated pension reforms, as he regretted that only a handful of sub-nationals are complying with the provisions of the pension reform Act.
Patrick Akinwuntan, Managing Director Ecobank said one of the areas discussed extensively at the meeting was the need to aggressively support financing for the creative industry which would then help create jobs and reduce high poverty levels and criminality.
Akinwuntan said all the banks are participating in the new drive and that they agreed at the meeting “that the CBN has a Central collation point where all the requests that come through any bank are forwarded.”
He said this would help the industry monitor impact in terms of mobilizing employment, creating jobs, stimulating the economy, exporting the talents of Nigerians, boosting foreign exchange
reserves, and even becoming a major player in this industry globally.
“The same applies to the export support fund, be it in cashew nuts, sesame seeds and all the various rich exports that we are able to mobilize because of the impact for employment, stability of the economy, and we are now in execution phase,” he explained.
Akinwuntan equally recalled that they had earlier published modalities for accessing financial support for the creative industry and are now encouraging the “teeming youth and professionals, be it in Fashion, information technology, movie production, music, software engineering to please go ahead and approach their banks with their proposals.”
He also informed that they are receiving good cooperation from a number of state governments, who are coming up willingly to provide land and resources for the creative industry, noting plans to set up an infrastructure base that would support the creative industry in Lagos.
According to him, the initiative also focuses around export drive which is critical to further deepening foreign exchange earnings of the country, as he encouraged such industry players to approach their banks.
“We are all committed to making this happen,” he assured.
In his opening comment, Ahmed Abdullahi, CBN Director, Banking Supervision, said the meeting also centered around how to stimulate consumer lending recognizing its importance in scaling up economicgrowth, and how to deal with present challenges.
Isaac Okorafor committee said bankers particularly welcomed the re-appointment of CBN Governor, Godwin Emefiele for a second, five year term and expressed their confidence that this would help policy continuity.
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