Nigeria’s housing need is huge. Deficit is put at about 17 million housing units at the moment, with an estimated 700,000 addition to this number yearly.
But the government says it has embarked on a journey of addressing this huge problem- creating a vehicle- the Nigerian Mortgage Refinancing Corporation (NMRC) that would see that citizens can now access mortgages at cheap and affordable rates that almost never existed.
Besides, Poverty is also prevalent as unemployment in the country stays high at 23.9 percent and the government also hopes to bridge the poverty and unemployment gap with the new housing scheme.
It therefore came as some sort of relief of as government began on Thursday, the implementation of the affordable housing scheme that it had launched since January. The scheme began with the rollout of some 10,000 housing mortgages at the first instance, which people can begin to apply for, beginning tomorrow(Monday).
Ngozi Okonjo – Iweala, Coordinating Minister for the Economy and Minister of Finance said government was dedicating the first set of 10,000 mortgages to first time home buyers, especially the young people. And this is to create employment, fight poverty and try to close up the huge inequality in the country, according to her.
Under the Mortgage Refinance Scheme, mortgagors can only access from N2 billion up to N20 billion.
What the NMRC would do is to refinance loans from the PMIs, practically making available to these institutions, long term loanable funds at cheap rates for house purchase.
The scheme would ensure that housing loans come as low as 13 to 13.5 percent at the first instance, and could drastically reduce that as time goes, the it was learnt.
The mortgage underwriting standards has also ensured that processing time for prequalified loans, which as at today runs from between 6 to 18 months will now be concluded within not more than 2 months.
Unlike the existing mortgage scheme which tenor lags for not more than 36 months, NMRC can now allow mortgage subscribers pay back within 15 and 20 years.
To be eligible, applicants must show evidence of current employment, tax compliance, regular income, tax compliance, as well combined household income others.
People who are self employed may also qualify but must show evidence of regular income and a bank account while drawings from their businesses will be used as evidence of income.
Applicants which meet the eligibility requirements would then be handed over to the Primary Mortgage Lenders (PML)for final processing, the PML will originate the mortgages to be backed or refinanced by the Nigerian Mortgage Refinancing Company, Okonjo-Iweala explains.
Recall that NMRC had already attracted up to N8.75 billion equity financing as well as some $300 million debt from the World Bank on very concessionary terms.
Analysts applaud that this recored depicts investor confidence and interest in the initiative that targets to ultimately provide affordable homes to the citizens.
Okonjo-Iweala also expressed the hope that over the next few years, the company would serve to ramp up the low contribution of mortgage finance to Nigeria’s GDP currently at approx. 1 % of GDP, compared to 77% in the U.S., 80% in the UK, 32.4% in Malaysia and 50% in Hong Kong.
According to her, government projects that with the ratio of 5 direct and 2.5 indirect jobs created per house, the 10,000 new mortgage beneficiaries should enable it to create at least 75,000 jobs as a start.
However, much as the scheme looks promising, there are also great challenges which may impede set goals.
Analysts, for instance say they can’t see how the huge housing gap can be bridged in the next ten years, due to obvious constraints.
“Right now, we do not have the capacity as a nation to deliver one million houses per annum, because it requires certain amount of technical expertise- it requires a whole combination of things to make one million housing units and unfortunately, we have not got the skills, workforce to make that happen,” says Hassan Musa Usman, Managing Director, Aso Savings and Loans.
Usman says first of all, skilled manpower must be made available, noting, “It is either you develop it or you import it. It takes time, it does not happen over night.”
He suggests a Programme that actually creates and develops capacity on a large scale basis.
Another fear is getting service lands across the country that equally have titles.
Estate developers often failed in delivering affordable housing due to issues around, especially cost of its acquisition. Getting the buy-in states to have a fastrack process for allocating lands, titles, quickly and that in situations where houses are built, governors can readily give consent to transfer from the origin to another person without much stress is paramount.
Usman sees this as a critical part of this whole housing process, because “you cannot just buy houses in slumps or in the middle of nowhere. The buyers would want houses that are in decent areas, where they can move about freely.
“You need to have lands in areas that are serviceable, where there are good roads, electricity, power, and so on. Unfortunately, those lands are not available at the moment. We have lands in Nigeria, but we do not have service lands for such developers.”
He says doing one million houses per annum so being proposed therefore, actually requires land infrastructure in place. “You must have skilled manpower in place, you must have funding in place and I am even assuming that on the land side, when land exists, it has titles. Land is about titles, it must have a Certificate of Occupancy (C of O),” he adds.
Usman says these are critical factors. “So, when we talk about bridging that gap, I do not see it being done over the next ten years. It is going to take much longer than that and I think that with concerted efforts, and all that is required, including reforms, we can make some progress.”
The finance minister, however admits these huge constraints, assuring that the federal government has initiated a Pilot States’ Scheme with the Minister for FCT, the Governors of Abia, Anambra, Bauchi, Bayelsa, Delta, Ekiti, Gombe, Kano, Kwara, Kaduna, Lagos, Edo, Enugu, Nasarawa, Ondo, Rivers and Ogun States.
The State Governors on their own part have committed to supporting the NMRC initiative in key areas like Property Registration, Enforcement of Mortgage Property and Access to Serviced Land.
Stakeholders commend government for initiating this process but they fear that that Nigeria’s present capacity can only deliver not more than one hundred to two hundred thousand houses per annum, maybe slightly more than that, may be not a million houses per annum, simply because of the constraints.
Onyinye Nwachukwu
