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“Idle funds is panacea for Mass Housing challenge” – Experts tell FG at ASO Housing Confab

By on May 2, 2013

A colloquium of experts in the housing value chain has advised the Federal Government should fund mass housing schemes, using the huge funds lying in bank vaults in the form of unclaimed dividends, dormant accounts, and accumulated premiums from pension schemes, among others.
These were some of the innovative sources of financing mass housing schemes, recommended by the panellists at the just concluded 3rd Housing Exhibition and Conference, organised recently by ASO Savings and Loans plc, at the International Conference Centre, Abuja.
The conference provided a platform for stakeholders to address the political, economic, legal and socio-cultural dimensions of the challenge of delivering of affordable houses in the right quantity in Nigeria.
The forum was attended by representatives of the different tiers of government, relevant ministries, departments and agencies, the academic community, and those in the housing sector, including researchers, civil society and financial institutions from Nigeria and other parts of the world.
Governments at all levels, the forum said should provide an enabling environment for private developers either by providing the basic infrastructure or an opportunity (tax rebates) for the developers to recoup investments in infrastructural development.
Pic 1They said the government should institute appropriate policies and laws to accelerate the provision of mass housing, including policies to reduce the cost of construction. “In this regard, the Land Use Act, amongst other relevant legislations, should be reviewed to address the bottlenecks it creates in title registration.”
They advocated a speedy passage of the Foreclosure Bill into Law to encourage infusion of capital to the mortgage banking/housing finance sector as well as guarantee free entry and free exit for existing and potential investors in the sector.
Stakeholders in the sector were urged to explore and invest in research, development and public enlightenment on the use of local materials and innovative architecture (e.g. green construction) in housing construction, adding that more needed to be done to generate data on the nation’s housing challenges for better planning.
Government, they said should make commitments to train artisans and craftsmen, whose inputs were required to deliver durable and affordable housing.
They also want the government to strengthen professional associations and provide relevant practical training, adding that regulatory bodies should be empowered to prevent the tragic effects of constructing substandard building.
The participants urged ASO Savings and Loans plc, in partnership with interested stakeholder organisations, to, as a matter of urgency, produce a strategic framework for achieving the objectives of providing 500,000 housing units by this year, which should set out the time frames, roles of partners and the expected milestones in the run-up to the target year.
The participants had earlier observed that it was disheartening that millions of Nigerians were homeless, particularly in urban areas, in spite of fact that the Federal Government was currently implementing a National Housing Programme, including a Presidential Housing Initiative in addition to the various housing schemes being promoted by states government and agencies of government.
The precipitants shared the commitment of ASO Savings and Loans plc to providing 500,000 houses by 2016 and noted that an estimated 12-16 million housing units were required to meet the demand for houses in Nigeria. Hence, Nigeria has a huge market for investment in affordable housing.
Other observations of the forum participants are that there was serious limitation to the resources available to stakeholders to provide the required number of houses to address the deficit.
According to them, the added responsibility given to private developers to provide basic infrastructure like roads, water and electricity supply, among others, contributed to high cost of buildings.
They said majority of existing housing schemes did not enjoy basic infrastructure; ignored traditional architectural designs and building material; did not take advantage of emerging non-conventional technologies; and disregarded local climatic conditions.
The mode of implementation of the Land Use Act in the various states of the federation, they said frustrated efforts to build affordable housing for low-income citizens. “For example, issues relating to the significance of certificates of occupancy (C of Os), in relation to other title deeds, some of which are rooted in cultures, remain unsettled.”
Another major constraint to building of affordable housing, they said was high cost of construction materials, adding that over 60 per cent of these materials were imported.
Participants said the low income group of people in the country had resorted to building their own homes, neighbourhood and cities, which developed as informal communities, because housing developers, had overbuilt upper-end homes that targeted high-income homeowners to the detriment of low-income members of the community.
Pic 3Various panellists discussed the challenges of mass housing. In a paper, ‘Mortgages as a Tool in Creating 500,000 Housing Units by Year 2016’, the Executive Secretary, Mortgage Banking Association of Nigeria (MBAN), Mr. Kayode Omotoso said housing had always been a programme of all Nigerian governments since independence; “yet 53 years later, numerous challenges still impair Nigeria’s ability to create a vibrant mortgage banking sector for sustained housing delivery.”
Omotosho said though access to housing is very readily available through mortgages in developed countries, it had continued to remain a major challenge in some emerging economies like Nigeria’s, due to the poor legal and regulatory framework, high costs of titling, dearth of long term finance and absence of Foreclosure Laws.
He said the contribution of Mortgage Banking Sector to the nation’s GDP was currently negligible at about 0.5 per cent, compared to 77 per cent in the US, 80 per cent in the UK, 50 per cent in Hong Kong, 33 per cent in Malaysia and about 45 per cent in South Africa.
He said one of the foremost challenges of the nation’s economy was that of developing a sustainable housing and mortgage finance system that would compare favourably with her peers.
“Besides basic shelter, land and housing in the form of Real Estate are some of the greatest means to short and long term wealth creation; hence the economic development of Nigeria is dependent on evolution of a virile Mortgage Banking/Housing Finance Sector,” he said.
He said the reform/recapitalisation of the Mortgage Banking Sector, supported by creation of a Mortgage Refinance Company initiated by Mortgage Banking Association of Nigeria (MBAN) in collaboration with the Central Bank of Nigeria (CBN), World Bank/IFC, Primary Mortgage Banks and Commercial Banks was in progress.
The aim, he said was to strengthen and create liquidity in the Sector, adding that more action was needed to improve the legal and regulatory frameworks in order to achieve effective creation of mortgages in the country.
He said efforts to create 500,000 housing units through mortgages by Year 2016 would require long-term funding/ liquidity in the mortgage sector. “The various deposits currently in the portfolios of Primary Mortgage Banks (PMBs) are mostly on short-term basis thereby creating dearth of long-term funds that could stimulate housing finance delivery, through Primary Mortgage arrangements.”
He said concerted efforts would need to be made by the Federal Mortgage Bank of Nigeria (FMBN), Primary Mortgage Banks (PMBs) and Mortgage Banking Association of Nigeria (MBAN) to enhance collection of monthly contributions from more Nigerians to deepen the National Housing Fund (NHF) Scheme in order to create more mortgages towards provision of affordable housing for Nigerians.
There was need, he said for PMBs and other mortgage originators in the sector to work together to form Syndicate/Consortia/Club Arrangements to share risks and expand the scope of project execution for large scale housing estate projects for affordable housing that the mortgage originators would otherwise not finance on their own.