For many Nigerians the dream of owning a home of their own is gradually becoming impracticable due to inaccessibility of affordable mortgage finance.
Inaccessibility of mortgage finance also, can largely be due to the high interest rates associated with mortgage loans especially those from the commercial/ private mortgage banks or institutions, nepotism, as well as corrupt practices/ mismanagement, poor public awareness and poor policy/ regulatory framework.
These factors and likely many others have continued to limit or even deny the larger Nigerian population from securing a mortgage finance plan. Despondently, apart from issues associated with land acquisition and cost of building materials, stakeholders believe that inaccessibility of affordable housing finance can summarily be said to be the bane of Nigeria’s built sector, obviously, over the years; it has been a major reason for the increasing housing deficit in the country.
From a macroeconomic point of view, policy analysts and economists consider the housing and mortgage sector a key indicator of an economy’s growth, development or under-development.
LEADERSHIP findings affirm the fact that the sector plays a crucial role in meeting the needs of a country’s population by facilitating easy access to loans and promoting financial inclusion.
A document obtained from the special assistant on Media and Communication to the housing minister Mark Chieshe explains that a robust mortgage system not only supports individual homeownership, but also stimulates economic activities by creating jobs in construction, real estate and related industries.
Despite the importance of this mortgage industry to a country’s economy, Nigeria’s mortgage sector has long been plagued by inefficiencies, a lack of transparency and complex bureaucratic hurdles that make homeownership an uphill battle for millions of citizens.
Sadly, Nigeria has a housing deficit exceeding 20 million units and this has over the years made the sector’s underperformance starkly evident. Research reveals that Mortgage penetration remains below one per cent of GDP, significantly lower than rates in other emerging markets like South Africa (30 per cent) and Kenya (five per cent). It is therefore right to assert that this disparity highlights systemic issues that have stifled growth and deterred investment in Nigeria’s mortgage sector.
Even though the minister of housing and urban development, Arc. Ahmed Musa Dangiwa, recently while inaugurating the board of Nigeria’s foremost mortgage finance institution, the federal mortgage bank of Nigeria, (FMBN) said that the bank, in less than two years, registered nearly 374,000 new contributors as well as processed N30.7 billion in NHF refunds and mobilised over N203 billion contributions, nevertheless, housing finance, LEADERSHIP findings noted, is still a prominent challenge for citizens.
Dangiwa who has on several occasions decried the enormous housing disequilibrium in the country also charged the management of the Bank to intensify their efforts in ensuring the actualisation of the long-delayed N500 billion recapitalization of the Bank in order to expand its capacity as well as provide large-scale, affordable housing finance and support broader national housing delivery efforts.
For those who are not under government employment, one can easily say the situation is worse for them. LEADERSHIP findings discovered that even the likely privileged population who are the civil servants are not left out of the unending search for housing finance and mortgage services.
A civil servant who only introduced himself as Yusuf revealed that he had applied to the scheme for over 10-years but, despite following up through his office’s union, nothing has come out of that.
“I have lost faith in the exercise; I can show you my alert where they deduct from my bank monthly. I hope they come down to everyone, if not, it will be difficult for just any mid/low-income earners to independently finance a housing project, considering the high rate of building materials presently in the country”.
LEADERSHIP also discovered that the experience is even worse for those in the private sector. Findings reveal that most citizens, especially those in the private and non-corporate organisations, are not even aware that as citizens, they are entitled to this mortgage privileges. For those few among them who most times are half informed, they have always believed that it’s a grim and impossible task for any private individual who is not connected to secure mortgage finance from the government.
A major grocery seller at Garki market, Stella Paul, further affirmed that it is difficult to obtain a mortgage from government owned institutions except from the commercial banks. She pointed out that it was difficult for her and her partner to accept the conditions of the Commercial banks which came with high interest rates and short repayment time frame.
The trader called on the leadership of the FMBN to extend their reach to business owners and those outside government cycles or employment.
A private financial service provider, specialising in mortgage and housing finance, Infinity Trust Mortgage Bank PLC (ITMB), said for Nigerians to achieve an effective mortgage financing system, it must streamline access to National Housing Fund (NHF) benefits and make it more transparent and user-friendly for contributors.
The communication lead of ITMB, Success Ayodele, said private mortgage banks in Nigeria face several systemic and operational challenges due to limited long-term funding sources, high inflation and interest rate environment as well as regulatory bottlenecks, low awareness and trust in the mortgage system.
She said there was an urgent need to ensure the digitisation of land registries and titling to reduce bureaucratic bottlenecks and speed up processes.
According to her, one of the reasons why Nigerians are not accessing mortgage finance is due to misinformation and poor advocacy. Ayodele called on Regulatory bodies and stakeholders to expand advocacy and invest in public enlightenment, adding that by doing so, they will build trust and educate the public in the usage of mortgage platforms.
Ayodele said despite these bottlenecks, the ITMB has remained committed in striving towards empowering many Nigerians with access to sustainable housing through decent and affordable mortgage solutions.
Recently, the managing director of the FMBN, Shehu Usman Osidi, during an oversight visit by the House of Representatives Committee on Housing, led by its chairman, Abdulmumin Jibrin Kofa, reiterated that the major Challenges of the FMBN are the shortage of funding and high volume of non-performing loans.
Osidi assured me that things are gradually coming to shape. He added that the FMBN under his leadership has proactively set up a loan recovery task team that is aggressively improving the Bank’s loan portfolio as well as reducing non-performing loans (NPLs).
In his bid to further boost the capacity of the bank and assist in bridging the housing disequilibrium in the country, FMBN Boss also pleaded with the legislators to assist in pushing into reality the recapitalisation of the bank and approve the review of the National Housing Fund (NHF) Act.
FMBN boss also at an event in Abuja while reviewing the bank’s performance disclosed that they had made an unprecedented operational surplus of N11.58 billion, marking a major financial turnaround in its 30-year history. He noted that his Bank was seeking the cooperation of Stakeholders as directed by FEC for necessary action towards attaining its recapitalization target to the tune of the minimum of N500 billion, which he said was critical and central to the effective delivery of FMBN’s mandate.
While also reaffirming the Bank’s commitment to transparency, efficiency, and affordable housing finance, Osidi said that it was positioning the nation’s mortgage institution as a driving force in Nigeria’s real estate sector:
“These efforts have resulted in an operational surplus of N11.58 billion from our Management Accounts for 2024. This is the first such experience since FMBN came into existence over 30 years ago. FMBN is pursuing a N500 billion recapitalisation plan, with N250 billion from the Federal Government and the remainder through debt capital to sustain its growth. A proposal has been submitted to the Federal Executive Council (FEC), which has directed further engagements with key financial institutions”, he explained.
Again, the managing director, at a workshop recently convened by the federal Ministry of Housing’s National Land Registration and Documentation Programme (NLRDP) in collaboration with the World Bank, highlighted that a well-structured and digitized land administration system would reduce transaction costs, improve transparency as well as enhance credit security and stimulate housing finance activities.
While explaining that recent initiatives taken by Dangiwa’s housing administration is bringing profound benefits to the effective delivery of housing, he noted that the activities of the NLRDP has created the potential to facilitate seamless title registrations, thereby positively impacting delivery of the Bank’s mandate.
“The Federal Mortgage Bank of Nigeria as Nigeria’s foremost provider of affordable housing finance recognises the importance of efficient land registration and documentation in enhancing mortgage accessibility and promoting financial inclusion,” he stated.
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