The Minister of Power, Works and Housing, Mr. Babatunde Fashola, wednesday said most Nigerians see government-backed housing loans as their share of the country’s financial resources, fondly referred to as ‘national cake.’
Fashola stated that it was for this reason that the national housing loan administered by the Federal Mortgage Bank of Nigeria (FMBN) has not yielded results over the years.
He alleged that the bank has a lot of defaulters from this practice and cannot go on to support housing acquisition on this structure.
The master spoke at the 32nd Annual Conference and General Meeting of the African Union for Housing Finance (AUHF) in Abuja.
He was represented by the ministry’s head of public private partnership, Eucharia Alozie, at the meeting.
“The National Housing Fund of 1992 is a collating reservoir of long term funds in terms of monthly contributions from workers in the public and private sectors. Unfortunately, most Nigerians see mortgage loans from government as part of their share of the ‘national cake’ leading to high default rates,” said Fashola in his remarks.
He stated: “This has forced the government to encourage prospective home owners to approach commercial banks who regrettably have high interest rates. Thus, the government who is supposed to be a major player in the provision of homes is now seemingly not on the frontline.
Fashola also said it was because of this reasons that the government established the Nigerian Mortgage Refinancing Company (NMRC) to help reduce the cost of mortgage loan by improving market efficiency.
According to him: “From the inception of government initiative in organised housing finance system to date, only a meager sum have so far been injected to the system. This accounts for less than 0.5 per cent of the Gross Domestic Product (GDP) as compared to other climes like United Kingdom and South Africa due to the inability of financial systems in providing low cost finance that meets the need of low and medium income earners.”
The minister said for this to change, the FMBN has to be strengthened by ensuring that full compliance with the National Housing Funds (NHF) Act.
He said despite these challenges, the federal government has renewed its desire to ensure that Nigerians are able to get homes they can call their own.
“I am happy to note that despite the challenges that housing delivery has encountered in the country over the years, the renewed vigor and policy re-orientation of this administration have set the agenda for housing revolution.
“In this regard, the ministry has produced six designs of one bedroom, two-bedroom, three-bedroom flats, bungalows and condominiums that will represent the Nigerian house which responds to our cultural diversity.
“Another key area of achievement is the pursuit and promotion of local content and standardisation of building components such as doors, windows, tiles, roof boards and other accessories to be produced by local manufacturers as part of our support for local industries and in pursuit of diversification and job creation.
“Effort is already being made to embrace and deploy modern technology to mass production of housing in all the states of the federation and FCT using the traditional procurement platform and the contractor finance initiative model, to reduce the housing deficit,” he explained.
Fashola also said the government plans to de-risk lending to approved housing developers as an incentive to make the housing sector attractive to private developers.
According to him:, “This will entail the government providing guarantees and other credit enhancement to developers. Government therefore plans to issue promissory notes to reduce developers financing requirements. Government recognises that provision of leverage and guarantees are critical in attracting private sector funds into the industry thereby creating thousands of affordable houses each year as well as generate considerable employment and commercial activities.