•Says affordable financing inevitable, informal sector shut out of housing plan

James Emejo in Abuja

The mounting inflationary pressure in the Nigerian economy could stall government’s plan for mass housing for citizens, the Managing Director/Chief Executive, Infinity Trust Mortgage Bank, Mr. Sunday Olumorin has said.

Olumorin, who disclose this, also said lack of Certificate of Ownership for lands remained a major disincentive for mortgage financiers.

Speaking on “Mortgage Financing in Nigeria: Impact on Economy and Financial Inclusion” at the 2023 workshop of the Finance Correspondents Association of Nigeria (FICAN) Abuja, Olumorin, said the rising prices of good and commodities especially building materials could discourage funding for legal mortgage as well as widen the housing deficit.

Nigeria’s housing deficit had grown progressively from about seven million housing units in 1991 to 12 million in 2007, 14 million in 2010 and subsequently 28 million housing units in 2022.

Represented by the bank’s Group Head, Business Development, Mrs. Ngozi Chukwu, Olumorin, explained that having the C/O was a critical condition for legal mortgage and urged the government to simplify the process of acquiring the land document to enable mortgage institutions play their part in the mass housing projects.

He said Land Use Act also remained problematic in the provision of housing for Nigerians.

According to him, the mortgage banking sub-sector of the financial services industry had since been faced with several herculean challenges including lack of long-term funds, fund mismatch (funding long-term with short term deposit), macroeconomic challenges in the form of high and volatile inflation, interest and exchange rates, which resulted in high cost of funds for both lenders and borrowers.

He said the subsector was also adversely affected by slow, expensive and bureaucratic procedures of title registration and transfer, lack of mortgage friendly laws such as foreclosure/eviction laws and lack of strong property rights as well as cumbersome legal and legislative framework for land acquisition.

He said the operations of mortgage financing was also hampered by the non-existent mortgage market infrastructure such as mortgage insurance, mortgage guarantee, mortgage collateral indemnity among others.

He added, “These challenges seriously hampered the development, scope and reach of housing finance to different categories of Nigerians.

“Within the space of about a decade, the subsector had however made remarkable progress in tackling these issues and the sub-sector has undergone significant evolution to keep up with global best practices.

“This was made possible by the efforts of the federal government, through the Central Bank of Nigeria (CBN) as the external regulatory agency for the mortgage banks.”

According to the Infinity Trust Mortgage Bank MD, the first major initiative that transformed the mortgage banking business environment was the recapitalisation of Primary Mortgage Institutions (PMIs) and a change of their status from mortgage financing institutions to full-fledged mortgage banks in 2011.

He however, noted that mortgage finance had been widely recognised as the key driving force for housing development in every country.

Among other things, he said the availability of housing provides psychological satisfaction and guarantees better healthcare for citizens of a country.

Olumorin said, “Housing should be given the first lift in every government fiscal and monetary policy to make funds easily accessible and at a cheaper rate because every activity in the housing sector generates employment that will boost and sustain economic growth.

“If the mortgage sub-sector in Nigeria must survive and attain its full potential to contribute significantly to the economy the government must be supportive and have a progressive outlook for the sector.

He also expressed worry that till date, the informal sector had been largely excluded from mortgage and formal housing finance services.

He added, “Although it is believed that people in this category cannot afford a mortgage, more often than not, even when they are financially capable of taking mortgage loans, they are denied access to them because they do not have proof of the consistency of their financial capability.”