Operators in Nigeria’s housing agencies and institutions have faulted the plan by Bola Tinubu, the president-elect, to merge federal agencies and form a new entity.
Tinubu, in his manifesto as the presidential candidate of the All Progressives Congress (APC), promised to merge all federal government agencies responsible for home ownership into a new big entity in a bid to address the housing deficit if elected.
According to him, the new entity would inherit the functions of existing housing authorities and shall be adequately capitalised by the federal government.
Besides funding, which the operators foresee as a major challenge, they also do not see any need for merging existing agencies or institutions which, according to them, are not even enough, given the country’s population and the housing needs of the people.
Obinna Chilekezi, principal consultant at Intes Training & Edu Services Nigeria, sees some benefits in collapsing the agencies into one, describing it as a good idea because it would reduce wastages and bureaucracies in the system, but several other operators think differently.
“There is no need talking about merging the housing agencies that are not even enough. How many do we have? One will be talking about the Federal Mortgage Bank of Nigeria (FMBN); the Nigerian Mortgage Refinance Company (NMRC), the Family Homes Funds, Federal Housing Authority and a few others that are neither here nor there,” Kehinde Ogundimu, MD/CEO of NMRC, told BusinessDay.
According to Ogundimu, what the country needs now is not reducing the number or merging existing agencies, but making them strong by capitalising them so that they can undertake bigger projects.
He said besides Fannie Mae and Freddie Mac, there are other housing agencies in the United States that provide mortgage and other housing loans such as Federal Housing Finance Agency (FHFA) and Federal Home Loan Banks.
“This makes for healthy competition among the agencies,” he said, adding that reducing the few agencies in Nigeria into one or two would make them have overbearing influence and become less efficient.
In the US, the FHFA, which should be an equivalent of FMBN, provides supervision, regulation, and housing mission oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.
On their part, Fannie Mae, Freddie Mac, and the FHLBank System together provide more than $8.1 trillion in funding for the US mortgage markets and financial institutions. Conversely, all of the federal housing agencies in Nigeria cannot raise this amount of money; FMBN has been yearning for N500 billion recapitalisation in recent years.
Tinubu has described the various federal agencies meant to promote home ownership as too small and fragmented, saying to address the housing deficit, he would ensure greater cohesion and efficiency by merging these agencies into a new, more competent body.
The new agency, according to his manifesto, will have a three-fold mandate, including granting low interest rate mortgages directly, guaranteeing qualified mortgages issued by banks, and purchasing mortgages from private banks.
“The guaranteeing and purchasing of mortgages will incentivise banks towards mortgage lending and will deepen the secondary mortgage market,” the manifesto said, adding that banks would also be encouraged to engage much more in the provision of affordable consumer loans for automobiles and expensive domestic appliances.
Read also: Setting a real estate and housing agenda for the next government
“A certain portion of bank lending must be earmarked for the consumer. All non-compliant banks will pay a penalty to the government. Compliant banks will be entitled to tax breaks and credits as well as favourable treatment by the CBN regarding inter-bank transactions and other monetary policy ratios,” it said.
The manifesto described home ownership as a source of prosperity, social stability and individual pride, adding that a vibrant residential construction industry is essential to a healthy modern economy.
But Joseph Aderinokun, an estate surveyor and valuer, said that rather than planning to recapitalise a mortgage agency to take care of housing, the next administration should concentrate on making lands available and create policies around access to funding that enable banks to fund mortgage projects.
“We need to streamline and rationalise the land conveyance process. In this way, we lower costs and delays and promote more efficient use of land. This more efficient allocation will bolster the housing industry and lower costs for investors and consumers,” Aderinokun said.
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