A new legislation which seeks to fast track housing delivery through establishment of National Housing Trust Fund has already been gazetted for second reading on the floor of the House of Representatives.
Analysts noted that the passage of the new legislation will help in bridging the estimated 17 million housing deficit and create millions of employment opportunities for Nigerian artisans.
The bill seeks to repeal the extant National Housing Fund Act, 1992 and to establish the National Housing Trust Fund Act, 2017 and for related matters.
Section 13 and 14 of the bill provides that contributions by employees in both public and private sectors of the Nigerian economy earning the national minimum wage and above shall contribute 2.5% of their basic salary into the fund.
Section 14(5) of the bill also mandated Federal Government to make any grant of money in either naira or foreign currency to the fund from time to time.
To ensure compliance, section 17 of the bill, mandated “any employer who has in its employment an employee earning the national minimum wage and above in both public and private sectors of the Nigerian economy shall deduct 2.5% if of the monthly salary of the employee as the employee’s contribution to the Fund.”
According to section 15a of the bill, the Fund shall be managed by the Board of Trustees of Federal Mortgage Bank of Nigeria (FMBN) to finance the housing sector through wholesale mortgage lending to mortgage institutions and as grant to housing corporations, cooperatives and estate developers.
Objectives of the Fund include: ‘Facilitate the mobilisation of fund for the provision of houses for Nigerians at affordable prices and ensure constant supply of loans to Nigerians for the purposes building, purchasing or improving their houses and refinancing of mortgages.
It also seeks to provide incentives for the capital market to invest in property development, encourage development of specific programmes that would ensure effective financing of housing development, in particular low cost housing for low-income earners; provide proper policy guidelines on the allocation of resources and funds between the housing sector and other sectors of the Nigerian economy.
Similarly, it will help to provide long-term loans to mortgage institutions for on-lending to contributors to the fund as well as provide loams to private developers, housing corporations and housing cooperatives for the purpose of development of housing estates.
To ensure security of the fund, section 20 provides that “a mortgage institution licensed under the Mortgage Institution bill and certified by Central Bank of Nigeria for accessing fund shall qualify for loan from the Fund on such terms and conditions governing the disbursement of the Fund as may be prescribed by the Board of Trustees.
Section 21(1 & 2) also provides that “any loan obtained from a mortgage institution by an individual contributor to the Fund shall be secured by a first mortgage on the property to which the loan relates,” while “any loan grants by the Bank shall be secured by treasury bills; title deed of the property owned by the borrower or its director; debentures, indemnity bonds and any other financial instruments or other securities as may be approved by the Board of Trustees.”
In the bid to protect the contributors into the scheme, section 23 provides that the Bank shall make refund of 30% of the total contribution back to the contributor after 10 years of participation; 50% after 15 years; 70% after 10 years and a balance of 100% at 60 years of age and payment shall made within four months of making the application.
“A contributor who has not obtained a housing loan from the bank and who becomes incapable of earning an income for the purposes of continuing to make contributions into the fund as specified in the bill shall be eligible to a refund of his contributions and the accrued interests.
Likewise, any contributor who has obtained a loan from on the bank and has attained the age 6
Speaking exclusively to BusinessDay on the housing sector, Chime Ugochukwu, President Real Estate Developers Association of Nigeria (REDAN), emphasised the need for a paradigm shift on housing development in Nigeria.
He specifically canvased for private sector driven housing policy.
“Hitherto, we have seen that government is not a very good player because of the challenges of rapid political changes, bureaucracy and huge ‘interests’. The challenges that are there in terms of changes in party in government, changes in government policies, changes in individuals who head organizations and the character it brings to bear upon the institution to start all over again.
“So the private sector are more sustainable as key drivers in affordable housing delivery and that is why we can say that it is at infancy but yet has a good potential. In South Africa, the housing sector contributes about 30% to the GDP; in Nigeria it is about 5%, which means we have a long way to go. We cannot even compare with countries that have about 60% housing sector contribution to their GDP, like USA and United Kingdom.
“So in terms of where we are and where we need to be, not only in comparing ourselves with them but comparing ourselves in deploying potential of the industry, comparing ourselves with multiplier effect potential of the industry, we have a long way to go. If you look at the housing sector, there is something you will see, what you will see is that there are critical components in the housing sector, we have the land component.
“Land is where every development takes place, whether it is residential real estate, commercial real estate, industrial real estate, tourism real estate or agricultural real estate, it takes place on land. Now our emphasis has been on industrial and residential real estate. the next issue is the finance component, the next one are the off-takers that will buy/stay in those houses.
“The funding situation is the same in every part of the economy. It is very dry. If you look at the reality on ground today, 20 years ago we were funding literally everything as government but we realize we cannot go that way again. Privitization and commercialization has come to stay. The current global approach is that private capital, funds on a sustainable basis, growth in any economy whether it is foreign direct investment or local investment in conjunction with foreigners.
“But for any investor to invest in any sector the return on investment must be okay. You don’t regulate return on investment, if you regulate return on investment and it is not acceptable by the players in that sector they will move to another sector,” Chime said.
