The Federal Executive Council, on Tuesday approved a new program that will leverage on about N20 trillion pension fund, in bridging Nigeria’s estimated 20 million housing deficits to provide massive housing and mortgage loan at 12% interest rates, with 25 years repayment plans.
The government also plans to leverage funding sources through the Nigeria Sovereign Investment Authority NSIA, Infrastructure Company infraCORP, amongst others.
Wale Edun, Minister of Finance and Coordinating Minister of the Economy, disclosed this while briefing after a marathon meeting of the Federal Executive Council (FEC), presided over by President Bola Tinubu, at the Presidential Villa, Abuja.
Edun who noted that the government is now going to be focusing on massive infrastructure development, said the plan is to boost the economy through the construction of infrastructures, based on multi sectoral approach that will bring together the major sectors of the economy
“It is time to focus on economic growth, housing, technology, etc,
He disclosed that the ongoing plans will bring together resources from all the sectors, including the private sector funds, mortgage funds for houses, so that Nigerians who are saving through the pension fund can enjoy economic prosperity.
Edun disclosed that the government will leverage on idle funds such as pension funds, amongst others, instead of waiting for foreign direct investments FDI.
The Minister noted that the President’s reforms which are still in process, are beginning to give benefits in various areas, particularly in terms of stabilizing the economy, the exchange rate, bringing inflation down, and eventually reducing interest rates.
Edun said the President is “committed to intervening on behalf of the poor and the vulnerable in order to ease the pains of this necessary reform.But at the same time, given where we are in terms of stabilization, it is time to focus on economic growth.
“ One of the key drivers of economic growth is investment in infrastructure, in housing, power, rail, roads, water transport, even technology. These these are key drivers of economic growth, they increase product when you invest in them, you get increased productivity, you get economic growth, and you get job creation, which reduces poverty, and that is the strategy.
“ So, it’s two pronged and we’re now pivoting towards this all important growth and you say where will the resources come from?
“ The fact is that even before we start looking to foreign investors, or we start looking to foreign funding, there is available in Nigeria, long term funds to fund infrastructure projects, and it’s within the pension.
“The life insurance and investment fund industry. Generally, there is about N20 trillion available.
“People save over their lifetime for their pension. And so in conversation, in consultation, collaboration and cooperation with the private sector, we are now able to announce and with the full knowledge and support of all parties, that there will be an initiative to fund growth through investment in infrastructure, including housing, provision of mortgages, long term mortgages, of up to 25 year mortgages at relatively low interest rates.
“Initially, of course, the government will standby and provide some support, particularly in this era of high interest rates but eventually as interest rates come down, there should be less room for the government through providing, for example, guarantees and so forth.
“So we can look forward to these huge funds being leveraged with the expertise, the ability, the capacity of the private sector, partnering with government to drive economic growth on the supply side, construction of houses will be funded.
“On the demand side mortgages will be made available so that those constructing houses have an outlet and Nigerians who are saving so much by way of pension funds, have the added bonus of access to affordable mortgages.
“That really is the long and short of this initiative and you also as much as anybody else can understand and see what it means in the construction industry to do for the country.
“That is the plan, that is the target that is the hope. And in this particular case, you have the best and the brightest and Nigeria has to offer, putting their minds together and committing to achieve in the scope”
Edun also announced that about 600 CNG powered buses and about 30,000 conversion kits will soon be made available to aide reduction or transportation cost.
He disclosed that the President approved the purchase of CNG powered vehicles for the Nigeria Custom Service NCS.
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