There is a need to bridge the existing deficit in housing delivery in Nigeria, as low-income earners seem not to be able to access mortgage loans, writes EHIME ALEX
To deepen delivery of affordable housing in Nigeria, the Federal Mortgage Bank of Nigeria and Family Homes Funds, last year, signed a strategic partnership agreement. With the pact, the Federal Government-owned institutions were expected to leverage their respective housing development mandates towards tackling the country’s housing crisis.
Majorly, issues affecting housing delivery in the country border on unresolved tenure arrangements, cost of building materials, access to infrastructure, deficiency of housing finance arrangements, stringent loan conditions from mortgage banks and time required to process legal documents as well as inadequate government housing policies.
It was designed under the terms of the Memorandum of Understanding that FMBN provides mortgage loans for houses that are being developed by FHF for beneficiaries, who must be contributors to the National Housing Fund Scheme.
Nevertheless, a large chunk of the country’s population is faced with housing crisis. Recent statistics showed that over 30 per cent of Nigerians, translating to about 62 million people, are currently faced with housing challenges, even as 80 per cent of the country’s population live in informal housing, with its related problems.
At a meeting to mark the 10th anniversary of Sow Real Estate, the Managing Director/Chief Executive Officer, Mrs Uzo Onukwubiri, said the National Housing Policy specified in detail that to achieve the goal of providing 15 million housing units by the year 2022, over one million housing units would have to be built each year, a number necessary to compensate for the housing shortage in the country.
“It is estimated that around 100,000 housing units are built each year, and an average of 80 per cent of Nigerians live in informal housing, which is plagued by problems related to poor quality and inadequate infrastructure,” she noted, according to a report by Vanguard newspaper.
Mortgage loan challenge
While the government has its set target, accessing mortgage loans has been one of the issues militating against housing schemes in Nigeria.
According to a report, ‘Economic and Financial Review December 2019’, by the Central Bank of Nigeria, the major thrust of the Housing and Urban Development Policy is to meet the quantitative housing needs of Nigerians through mortgage finance. It, however, highlights that some of the reasons identified for the failure of governments’ interventions to meet set objectives include non-consideration of low-income earners by planners during design and development of the housing programmes as well as lack of access to credit facility due to high interest rate.
The apex bank also noted the inability of most workers, especially civil servants and self-employed persons at the lower rung of the income strata to afford equity contribution and meet monthly affordability demand of repaying a mortgage loan, which must be equal to 33 per cent of the applicant’s monthly income.
“To access a mortgage loan in Nigeria, you have to earn at least N200,000 a month. To an average worker [who] is earning N30,000 a month, not even paid yet by some governors in Nigeria, basic life amenities not provided to the citizens of the country, what’s the essence of this government,” a twitter user lamented.
As the name implies, a mortgage loan is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender (usually a bank), wherein the borrower receives cash upfront then makes payments over a set time span until he repays the lender in full.
Expectedly, the mortgage banks are to play an active role in lending to people with less access to banking activities, such as the unbanked or underbanked, or in situations where borrowers do not have good credit history.
Although, Nigeria has, through the NHF, provided a scheme which entitles all Nigerians above the age of 18 years in paid employment to access a low-interest, government-funded loan. The scheme allows members to contribute 2.5 per cent of their monthly salary to the fund through the FMBN and obtain a maximum of N15m, with a repayable plan that spans over a maximum of 30 years at six per cent interest rate.
