In the last 41 years of its existence, the Federal Mortgage Bank of Nigeria (FMBN) says it has so far disbursed N193.4 billion to 18,935 Nigerian workers.
Ahmed Dangiwa, Managing Director of FMBN, revealed the information recently in Abuja at the launch of FMBN’s digital platforms which it did in collaboration with Nigerian Labour Congress (NLC), Trade Union Congress (TUC) and Nigeria Employers Consultative Association (NECA).
BusinessDay analysis reveals that the N193.4 billion disbursed across the country as mortgages by FMBN since it was create in 1977 is N3 billion less than N196.4 billion Lagos state Internally Generated Revenue for the first 6 months of 2018.
Reacting to this revelation, Yemi Stephens, a partner at Estate Links, a real estate firm said, said the amount disbursed could only be measured to a needle dropped in an ocean.
“This is like dropping nothing in an ocean; no wonder the country has a huge housing gap”, he said, explaining that food, shelter and clothing were the basic needs of any man. “It is unfortunate that people are even sleeping under the bridge in Lagos.”
Nigeria has one of the lowest mortgage-to-Gross Domestic Product (GDP) rate at about 0.6 percent, which obviously lags Ghana’s 2 percent, South Africa’s 30 percent, the U.S and UK rate at 60 percent and 70 percent respectively.
This has negatively robbed off on the housing sector of Africa’s most population nation, and analysts have disclosed that the country requires about 16-20 million housing units to solve its housing demand considering it has an average growth rate of about 3 percent per annum.
Property analysts polled in a BusinessDay survey linked the poor performance of Nigeria’s mortgage industry to legal, economic and socio-cultural factors coupled with lack of advocacy, as studies have shown that only one out of 15 adults in the country understand what mortgage means.
Adeniyi Akinlusi, CEO, Trustbond Mortgage Bank said “a large portion of Nigeria’s population is outside the housing market and mortgage remains too expensive for many of them to access and afford.”
He explained that the informal sector which is the largest segment of the Nigerian population is still outside the housing market and this population accounts for over 60 percent of the country’s GDP.
Mortgages are also loans which means that they come with interest rates, and typical mortgage interest rates in Nigeria range between 7-10 percent for the FMBN-supervised National Housing Fund (NHF) and between 15-25 percent for commercial mortgage institutions. Property experts say the rate is one of the highest in the world.
Aside from the interest payable, the potential buyer must also have a certain percentage of the total amount needed for the purchase readily available; this amount is known as equity and should range between 20-50 percent of the total cost of the home.
So, in Nigeria for instance, a Mortgage of N25million at 15 percent per annum interest rate means repayment of N37.9 million in interest only over the 15 year period, which is even more than the principal itself. The trick here is that at 15 percent interest rate, it takes a lender approximately 7 years to recover the N25million it lent to you. That is about 6 years if the interest rate is 20 percent.
Stephens asked that “government should wake up and own up to its responsibility; it should fund and monitor FMBN; in short, they should restructure everything well and bring in a ‘new’ mortgage bank.”
According to Association of Housing Corporation of Nigeria (AHCN), underdevelopment of Nigeria Mortgage sector in driving home ownership is worrisome as more than 90 percent of new homes utilise funds from personal savings for incremental construction.
Nigeria government in the second quarter of last year revealed its plans to inject N500 billion ($1.4 billion) into the Federal Mortgage Bank of Nigeria for over the next five years with effect from 2019 in an effort to spur home ownership that has failed to take off in Africa’s largest economy.
According to industry experts, the intervention by the government through the mortgage lender is likely to address the housing issues in the country to some great extend, although not much has been said about the plans since the announcement in 2018.
FMBN was created in 1977 to replace the Nigerian Building Society. Between 1978 and 1985, the lender was the only mortgage institution in Nigeria. According to the constitution of Nigeria, the Federal Mortgage Bank was established to meet the housing needs of all citizens of the country.
It is regarded as the apex mortgage finance institution in the country and regulates the activities of primary mortgage loan originators
In a direct government intervention to expand the mortgage industry in Nigeria, the bank was established by the military government of Olusegun Obasanjo to be a wholesale and retail credit institution that would provide long term financing to home buyers, building material firms and mortgage financial institutions.
Endurance Okafor
