In an economy where housing finance by public authorities is about 10 percent, mortgage banks contribute about 2 percent, while contribution from banks and other institutions is insignificant; the contribution of mortgage to housing finance is bound to be low. And that is Nigeria story.
As Africa’s most populous country and the continent’s largest economy, Nigeria is ahead of all other African countries in procedures legally required for registering property. Here it takes about 360 days to register property as against Ghana’s less than 10 days, In Lagos, the country’s economic hub, the cost of registering property is about 15 percent of the value of the property.
Altogether, there are 16 stages and 60 steps to getting a property registered in Lagos, eight stages and 30 steps for each of the lender and the borrower, making it difficult to get mortgage for housing finance.
“This is against what obtains in other economies including Ghana and South Africa. Ghana, before now, had a dysfunctional land administration, long and expensive procedures that lasted up to five years and involving six different agencies supervising which resulted in inefficient state land bureaucracy and customary tenure,” Sonnie Ayere, GMD/CEO, Dunn Loren Merrifield Capital, noted at a real estate event in Lagos.
Continuing, Ayere said that when the Ghanaian government instituted reforms, property registration was cut to 34 days and queues at the lands commission disappeared, making it possible for the mortgage sector to thrive.
He also cited the Egyptian experience where government identified high fees and inefficient government agencies that hindered the formalisation of real estate as a major issue and sorted it out by reducing property registration fees, simplifying the property registration process thus encouraging citizens and companies to obtain titles.
Ayere, therefore, called for discarding of multiple verification payment, deployment of Global Information Services (GIS), making payments with a single receipt, improving capacity building and significant investment in technology.
Hakeem Oguniran, managing director, UACN Property Development Company (UPDC) plc, noted five drawbacks to housing finance including cost, character, capacity, collateral and conditions.
Oguniran pointed out that the problem with land registration was much with the system, explaining that the system was people-driven and not process-driven. He recommended that there should be one-stop-shop for perfecting title and should be made business-like.
Fotmer MD/CEO, Resort Savings and Loans plc, Abimbola Olayinka, also noted that the Land Use Act should be used to empower the people and not as an economic and political tool by state chief executives, adding that the Act should be taken away from the constitution so that it could be easily tinkered with.
Olayinka recommends that land administrators should adopt what he called three-one-three strategy for land registration, explaining that land titles should be perfected in three days at one central place, and at the cost of 3 percent of the value of the land.
In other economies, especially in the advanced economies of the world, housing finance is synonymous with mortgage, because in such societies, the only known way of buying and owning a home was by applying for, and accessing a mortgage facility.
In Nigeria, the story is different. This is a country where homeownership is realised almost 100 percent from own savings or through communal or co-operative efforts.
In Lagos, for instance, a city of about 20 million people where over 60 percent of this population lives in rented accommodation, unconfirmed report has it that about 86 percent of the housing stock in the city is funded from household income.
