Anybody with a good sense of history will surely have many questions to ask about the numerous schemes that have been initiated in the housing and mortgage sector which have either been suspended or abandoned. One of such schemes is the federal government’s My Own Home.
The federal government, through the Central Bank of Nigeria (CBN), has been intervening in the housing sector with programmes, policies and initiatives that are aimed at getting more Nigerians, especially the low income earners, on the property/homeownership ladder.
Besides the Family Home Finance (FHF) and the Federal Integrated Staff Housing (FISH), there is also the new My Own Home scheme which is an offshoot of the Nigeria Housing Finance Programme (NHFP) set up by the Federal Government and implemented by CBN with the support of the World Bank.
The housing and mortgage markets are still waiting for the CBN and the selected primary mortgage banks (PMBs) for the implementation of this scheme which holds out hope for mortgage borrowers and home seekers.
The beauty of this scheme, according to the government, is that it offers mortgage guarantee that allows borrowers with insufficient or no equity contribution to access mortgage for home ownership. Besides, it will increase lending to low-income earners in the formal and informal sectors through microfinance banks for incremental housing construction or improvement.
Government believes that this scheme has the interest of every Nigerian, but being a new initiative, there is still no statistics to quantify the response of Nigerians to it. It still needs some time to take firm root and have imprint on the minds of the public. But it seems to be taking forever for this to happen
Expectation, at inception, was that this product would provide a platform for potential mortgage clients who do not have the required equity contribution, that is, initial deposit of 20 per cent of the value of a property, for a mortgage but have the capacity to make the regular payments, to access a mortgage on the basis of a third party guarantee.
The good news then was that homeowners with insufficient or no-equity contribution could approach their lenders for a mortgage guarantee and the mortgage guarantee firm would insure only the equity contribution required so that the lender could advance the full value of the mortgage loan for the property.
There were fears, however, that the country’s unfriendly investment climate, which is affecting the mortgage industry, could impact this scheme negatively. High and volatile exchange rate, traditionally stringent operational guidelines for mortgage banks and general difficulty in doing business in Nigeria are potential risks along with issues of Foreclosure Law and inhibitions from the Land Use Act 1978.
But it remains to be known if these fears and potential risks are responsible for the inaction and silence that the housing and mortgage markets are getting from the promoters of the scheme.
It also remains to be seen that part of the federal government’s plans for the housing sector is to introduce public private partnership scheme that seeks to increase access to housing finance.
To implement this scheme, the CBN selected recently 34 primary mortgage banks (PMBs) and four commercial banks to facilitate access to housing finance for low-income earners in the formal and informal sectors.
The plan was these banks along with nine other micro-finance banks to drive the My Own Home scheme whose main objective, in line with the parent NHFP, is to catalyse the growth of the housing sector through de-risking the housing finance value chain and improving access to finance.
The 34 selected PMBs and others are to benefit from a Housing Micro-finance Fund estimated at $15 million, and also from a $10million Technical Assistance Fund, with LAPO Microfinance Bank as pivot of the pilot scheme in the housing sector. Unlike the conventional mortgage, My Own Home allows beneficiaries to use the loan for purchase of land, incremental building or renovation.
The scheme has broad-based stakeholders and partnerships that include the Federal Government of Nigeria, Federal Ministry of Finance, Central Bank of Nigeria, World Bank, Federal Ministry of Power, Works & Housing, Federal Ministry of Justice and Mortgage Banking Association of Nigeria (MBAN).Others are mortgage originating institutions such as Mortgage Lending Banks (MLBs) that are participating in the scheme through equity/investment in Nigeria Mortgage Refinance Company (NMRC).
There is need now, more than ever before, for strengthening the housing sector by setting up sustainable framework by mortgage originators such as financial institutions to access long-term refinancing and NHFP is expected to create the enabling environment for that. It is also expected to scale-up mortgage and housing finance awareness through mortgage literacy, customers’ right, responsibilities and education.
Adeniyi Akinlusi, the MBAN President, is of the view that the scheme will revamp the housing finance sector and also make access to housing finance a lot easier. He told BDSUNDAY that NMRC would be providing long-term refinancing of mortgages and standardising mortgage procedures.
According to him, most initiatives that are solely funded and run by the government as social housing programmes are usually not successful and sustainable. “My Own Home, being a PPP is likely to succeed going by our experience with other PPP programmes such as NMRC, infrastructure provision and even the pension scheme reform, which also have private sector stakeholders.”
